Impending Changes to Federal Tax Credits Threaten Electric Vehicle Adoption

Starting in 2024, new rules will reduce the number of electric vehicles (EVs) that qualify for federal tax credits in the United States. The stricter rules, aimed at encouraging automakers to manufacture vehicles and parts in North America while bypassing China, will make it more difficult for EVs to qualify for the subsidy. The credits, up to $7,500 per vehicle, have helped make EVs more affordable. Tesla has already warned that its least expensive Model 3 sedan and long-range version will no longer qualify for the tax credits due to their batteries being made in China. The new rules add another set of restrictions, disqualifying vehicles containing components made in China or made elsewhere by a firm under Chinese government control.