The rules surrounding EV tax rebate eligibility change for 2024 and it starts in just a few weeks. There are still a lot of unanswered questions about which cars will be eligible for the full $7,500 federal incentive. Unlike the current system, which requires you to take the discount from the purchase of the car as a reduction in your tax bill when you file taxes, the new system will allow dealers to take the full amount as an instant discount from your purchase price, and it’ll be applied to your taxes after the fact. The new system is a bit more stringent, however, requiring a lower MSRP cap and a battery built in the U.S. to be eligible. So which cars fit the bill?
The point of this change is to provide incentives for automakers to build their batteries and source their materials in the U.S. as an effort to prop up the U.S. industry against China’s dominance. China currently produces about 70 percent of all electric vehicle batteries, and this federal program seeks to level the playing field a bit. EVs with battery materials sourced from “foreign entities of concern” [China, North Korea, and Russia, namely] will get no federal incentive at all. Cars with at least 50 percent of materials sourced in North America, or another of the 20 countries the U.S. has a free trade agreement with, will be eligible for $3,750 of the rebate.
To get the full rebate amount, EVs will need to have at least half of their battery components sourced and assembled in the U.S., Canada, or Mexico specifically, plus the critical minerals—lithium, nickel, cobalt, manganese, and graphite—need to have been sourced from a country the U.S. has a free trade agreement with. Even if your EV meets all of these criteria, it could get no federal support if you make too much money (over $150,000 for individuals), or it costs too much. Sedans have a price cap of $55,000, while SUVs have a price cap of $80,000.
These new rules have pushed a few cars off the rebate list entirely, and others have had their status reduced from the full rebate to just half. For example, Ford says the Mustang Mach-E will likely no longer be eligible for any rebate starting January 1. Tesla, meanwhile, says the Model 3 RWD and Long Range will have their incentives reduced to $3,750. Volkswagen ID.4 and Nissan Leaf also seem to be falling off the list.
So which cars are still eligible for the full boat? Let’s find out.
