Many Electric Cars Will Not Qualify for New Tax Credit Under New Bill

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Electric Cars Are Too Costly for Many, Even With Aid in Climate Bill – The New York Times

A new climate, tax, and heathcare bill was approved by the senate on Sunday. The bill would put restrictions on tax credits for new and used electric vehicles. It would require electric vehicles to be assembled in North America in order to be eligible for the tax credit of $7500. The Senate bill also pushes Auto manufacturers away from using foreign sourced or manufactured battery components; this includes Chinese manufactured components. China currently dominates the battery industry. And after 2023, cars will be required to have batteries that are sourced domestically. There must be a minimum percentage of the battery sourced this way in order to be eligible for the tax credit.

John Bozzella with The Alliance for Automotive Innovation stated, “The EV tax credit requirements will make most vehicles immediately ineligible for the incentive.”


The bill also creates a tax credit of $4,000 for used electric vehicles and allocates $3 billion for the United States Postal Service (USPS) to use and purchase electric vehicles, including charging equipment.


The prices of EVs are rising, demand for EVs is increasing, and materials are becoming harder to obtain. EVs are more expensive than just last year. According to Kelley Blue Book, EVs are up over 13% from the previous year. Automakers cite rising materials costs as a significant cause for the increase in prices of electric cars, but demand is also driving up prices. With the rise of inflation, people are looking to save wherever possible, tax credits included. But if the requirements for those tax credits decrease purchasing options, they may not have the intended effect. Only time will tell if it helps or hurts Americans and the Electric Vehicle Industry. The bill still needs to be approved by Congress. A vote in the house is expected this Friday.

For more coverage on this story, check the following news sources:

  1. Electric Cars Are Too Costly for Many, Even With Aid in Climate Bill  The New York Times
  2. Automakers say U.S. Senate bill will jeopardize 2030 EV targets  Yahoo Finance
  3. No electric vehicles on the market today qualify for the new EV tax credit  The Verge
  4. The climate bill could short-circuit EV tax credits, making qualifying for them nearly impossible  The Conversation Indonesia
  5. How top-selling electric vehicles will be affected by new tax credit  Yahoo Finance