Volkswagen, Rivian, Nissan, BMW lose access to US EV tax credits

THE US Treasury said Monday (Apr 17) that Volkswagen, BMW, Nissan, Rivian, Hyundai and Volvo electric vehicles (EV) will lose access to a US$7,500 tax credit under new battery sourcing rules.

The Treasury said the new requirements effective on Tuesday will also cut by half credits for the Tesla Model 3 Standard Range Rear Wheel Drive to US$3,750 but other Tesla models will retain the full US$7,500 credit.

Vehicles losing credits on Tuesday are the BMW 330e, BMW X5 xDrive45e, Genesis Electrified GV70, Nissan Leaf, Rivian R1S and R1T, Volkswagen ID.4 as well as the plug-in hybrid electric Audi Q5 TFSI e Quattro and plug-in hybrid (PHEV) electric Volvo S60. The Swedish carmaker is 82 per cent-owned by China’s Zhejiang Geely Holding Group.

The rules are aimed at weaning the US off dependence on China for EV battery supply chains and are part of President Joe Biden’s effort to make 50 per cent of US new vehicle sales by 2030 EVs or PHEVs.

Treasury also disclosed General Motors (GM) electric Chevrolet Bolt and Bolt EUV will qualify for the full US$7,500 tax credit.

GM said earlier it expected at least some of its EVS would qualify for the US$7,500 tax credit under the new rules, including the 2023 Cadillac Lyriq and forthcoming Chevrolet Equinox EV SUV and Blazer EV SUV. Treasury said all GM EVs will qualify.

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Earlier, Ford Motor and Chrysler-parent Stellantis said most of their electric and PHEV models would see tax credits halved to US$3,750 on Apr 18. Treasury confirmed the automakers’ calculations.

The rules were announced last month and mandated by Congress in August as part of the US$430 billion Inflation Reduction Act (IRA).

The IRA requires 50 per cent of the value of battery components be produced or assembled in North America to qualify for US$3,750, and 40 per cent of the value of critical minerals sourced from the US or a free trade partner for a US$3,750 credit.

The law required vehicles to be assembled in North America to qualify for any tax credits, which in August eliminated nearly 70 per cent of eligible models and on Jan 1 new price caps and limits on buyers income took effect.

Last week, the Environmental Protection Agency proposed new emissions rules that forecast 60 per cent of new vehicle sales in 2030 would be EVs.

A preliminary administration analysis found nearly 65 per cent of first quarter EV sales qualified under North American final assembly and price cap requirements; more than 90 per cent of those previously eligible first quarter sales remain eligible for at least a US$3,750 credit.

Treasury in December said EVs ineligible for the US$7,500 consumer tax credit could qualify for a commercial leasing US$7,500 credit. REUTERS