(CNN) The Treasury Department has revealed which cars will qualify for the new electric vehicle tax credit. Fewer models are eligible for the new subsidy than in previous years, but some of the most popular EVs are still eligible, according to Monday’s announcement.
Under the new law, consumers can reclaim up to $7,500 in tax credits on eligible cars.
Sixteen new models and some of their variants are eligible for the new credit in full or half, while nine models – mostly foreign-made vehicles – are not eligible for now.
Most of the eligible cars are made by the “big three” EV automakers in the US – Ford (F)General Motors and Stellar – Plus Tesla (TSLA).
Here’s what you need to know.
Which models are eligible for the new EV tax credit?
2022-2023 Chrysler Pacifica PHAV
2022-2023 Jeep Wrangler PHEV 4x
2022-2023 Jeep Grand Cherokee PHEV 4x
2022-2023 Ford F-150 Lightning (Standard and Extended Range)
2022 Ford E-Transit
2022-2023 Ford Mustang Mach-E (Standard and Extended Range)
2022 Ford Escape Plug-in Hybrid
2022 Lincoln Corsair Grand Touring
2023 Lincoln Aviator Grand Touring
2022-2023 Chevrolet Bolt
2022-2023 Chevrolet Bolt EUV
2023-2024 Cadillac LYRIQ
2024 Chevrolet Silverado EV
2024 Chevrolet Blazer EV
2024 Chevrolet Equinox EV
2022-2023 Tesla Model 3 Standard Range RWD
2022-2023 Tesla Model 3 performance
2022-2023 Tesla Model Y AWD
2022-2023 Tesla Model Y Long Range AWD
2022 Tesla Model Y performance
Which EVs are not eligible for the new tax credit?
Nine models from foreign brands, including Hyundai and Nissan, are ineligible for the new tax credit. However, that could — and probably will — change in the coming months and years, as some brands are building factories in the U.S. to assemble their vehicles.
What about used and leased EVs?
A separate tax credit applies to used EVs, and does not meet such strict requirements on battery content or production. Used EVs are eligible for general tax credits and also come with certain income requirements.
Similarly, leased vehicles may qualify for a $7,500 tax credit if there are no stricter rules about the car’s batteries and final assembly, meaning consumers who want more choice about which model to drive can lease instead of buying outright.
Where can I see updates to the list of eligible EVs?
A list of eligible new and used EVs is updated at www.fueleconomy.gov.
How much cash back can I get to buy an EV?
Under the new law, consumers can get up to $7,500 in tax credits on qualifying cars. As long as the vehicles meet the requirements, there is no limit to how many EV automobiles can be sold for tax credits. This is a change from the previous rule that limited the number of vehicles that could be sold with tax incentives.
Will more EVs be added to the tax credit list?
Some cars that were previously eligible for tax credits have been eliminated under the new law. But administration officials told CNN that more cars could be added to the list, though it could take months or years as automakers scramble to relocate factories and supply chains to the U.S. and others under these free trade agreements.
Why are fewer EVs eligible for tax credits?
The new Treasury bill, the Inflation Reduction Act on EVs, comes from the Climate and Clean Energy Act passed by Congress last year. The rules are written in a way that helps streamline the supply chain for essential minerals such as EV batteries, solar panels and small rechargeable batteries.
If automakers want EVs to qualify for the $7,500 tax credit, there are two main requirements they must meet: a critical mineral requirement and a battery component requirement, each worth $3,750.
The essential minerals requirement requires a certain percentage of the value of the critical minerals that power EV batteries — such as lithium, nickel, graphite and copper — to be mined or processed in the United States or a country with a free trade agreement. with. The minerals could also be recycled in North America. The battery replacement requirement mandates that a certain percentage of the battery components cost be manufactured or assembled in North America.
Importantly, these requirements will increase over several years. For essential minerals, the percentage will start at 40% in 2023 and rise to 80% in 2027.
Administration officials and experts agree that the rules are too complex to implement in such a short period of time.
“They are very complex,” White House senior adviser John Podesta recently told CNN.
What countries can the materials come from under the new EV tax credit law?
Twenty-one countries have free trade agreements with the US on essential minerals: Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore and Japan.
Countries including Chile and Australia are popular because they both have extensive lithium supplies and extensive mining operations. According to senior administration officials, the new law will make lithium from these countries more competitive: instead of going to China, minerals could go to Japan or Korea or directly to the United States. Korea, Mexico, and Japan have major auto assembly plants, and most of these cars are sold in the United States.
Biden said the United States is negotiating to add the European Union to the list, and others may be added in the future.
How long would it take to establish a critical mineral supply chain in eligible countries?
The past few months have seen a flurry of announcements from auto companies moving their EV and battery manufacturing plants to the US and neighboring countries.
But experts and officials say the start of a critical mineral supply chain — mining and refining — will be the most difficult aspect to change. This is largely because China has strict controls. The US has a few lithium mines located in Nevada. Companies are scrambling to start lithium mining in California’s Salton Sea area, although commercial operations have yet to begin.
The Energy Department “could provide loans to build a battery manufacturing facility,” Boylan said. “It’s a whole different ballpark than talking about permitting open-pit lithium mining.”
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