The US Treasury implemented new battery sourcing rules in December, to reduce dependence on Chinese suppliers in the electric vehicle supply chain.
As a result of these rules, many electric vehicles, including models from Nissan, Tesla (Cybertruck All-Wheel Drive, Model 3 Rear Wheel Drive) and Chevrolet (Blazer EV), lost eligibility for tax credits of up to USD 7,500, news agency Reuters reported.
The number of EV models qualifying for tax credits decreased from 43 to 19.
The Treasury issued guidelines specifying the new battery sourcing requirements and these rules came into effect on Monday. Some manufacturers are still in the process of submitting information on eligible vehicles, which could lead to changes in the list.
The list of vehicles no longer eligible for tax credits includes the Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit, among others.
Volkswagen expressed optimism that its MY2023 and MY2024 ID.4s will be eligible under the new rules.
The Treasury mentioned that automakers are adjusting their supply chains to ensure continued eligibility for the new clean vehicle credit, with a focus on partnering with allies and bringing jobs and investment back to the United States.
General Motors stated that all of its EVs, except the Chevrolet Bolt, would temporarily lose eligibility. The Lyriq and Blazer EV are losing credits due to two minor components and GM expects these models to regain eligibility in early 2024 after a sourcing change.
The 2022 Inflation Reduction Act reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify, thereby eliminating nearly 70 per cent of eligible models at the time.
In December, Tesla disclosed that its Model 3 Rear-Wheel Drive and Long Range vehicles would lose federal tax credits starting 1 January. The Model 3 Performance retains the USD 7,500 credit.
