The U.S. Treasury Department on Friday unveiled stricter electric vehicle tax rules that will reduce or cut tax credits on some zero-emission models but grant buyers another two weeks before the new requirements take effect.
the Model 3 rear-wheel drive credit will be reduced as a result of the guidance. The government will publish by April 18 a revised list of qualifying models and tax credit amounts.
Alliance for Automotive Innovation CEO John Bozzella said in a statement his best guess is "few" EVs on the market will qualify for the full $7,500 credit after April 17. He noted the requirement EVs be assembled in North America to qualify for any credit eliminated 70% of models. The IRA requires 50% of the value of battery components to be produced or assembled in North America to qualify for a $3,750 credit and 40% of the value of critical minerals sourced from the United States or a free trade partner also for a $3,750 credit.
On Tuesday, the United States and Japan inked a trade deal on EV battery minerals. Treasury says newly negotiated critical minerals agreements can be considered free trade agreements. The guidance lists Japan as having a U.S. free trade deal.
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