The number of electric vehicles (EV) that qualify for tax credits fell from 43 to 19 on Monday following new rules about the number of components in the vehicle that can be made by China and other foreign entities, according to Reuters.
On Dec. 1, 2023, the Treasury Department released guidance for which EVs are eligible for its $7,500 tax credit, requiring vehicles to have at least 60% of battery components and 50% of total critical minerals used not be from a foreign entity of concern like China starting in 2024. Vehicles that are impacted by the changes include the Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive 50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit, losing eligibility for the credit, according to Reuters. (RELATED: The US Rings In The New Year Facing Milestone For Massive Federal Debt)
“The Inflation Reduction Act has unleashed an investment and manufacturing boom in the United States, and since President Biden enacted the law, ecosystems have developed in communities nationwide to onshore the clean vehicle supply chain,” Janet Yellen, Treasury secretary, said in the release. “The Inflation Reduction Act’s clean vehicle tax credit saves consumers up to $7,500 on a new clean vehicle and hundreds of dollars per year on gas, while creating American manufacturing jobs and strengthening our energy security.”
EVs can still qualify for a $3,750 credit if they meet only one of the requirements for either the battery components or the critical minerals, according to the Treasury. The requirement for North American production of battery components will gradually increase to 100% by 2029, while the critical mineral requirement will increase to 80% by 2027.
Chinese automaker BYD sold 526,409 fully electric vehicles in the fourth quarter, meaning $TSLA will need a record showing to maintain its No. 1 status when it unveils sales figures on Tuesday. pic.twitter.com/h1CJTbCAn4
— Cheddar Flow (@CheddarFlow) January 1, 2024
Although components can be partially from a foreign entity of concern, all final products must be manufactured or assembled in North America to be eligible, according to the Treasury.
The EV tax credits are part of billions of dollars in subsidies from the Biden administration in an effort to make all new vehicle sales electric by 2030 in an effort to combat climate change. China currently dominates the green technology supply chain, producing around 90% of rare earth metals and producing around 79% of all lithium-ion batteries sold in 2021.
The Treasury did not immediately respond to a request for comment from the Daily Caller News Foundation.
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