Discover the Electric Vehicles (EVs) and Hybrid Cars Eligible for Tax Credits in 2024.
Entering the spotlight: Tesla, Rivian, and the Ford F-150 Lightning. Exiting the stage: nearly all other contenders.
A year ago, almost every recently introduced electric vehicle and plug-in hybrid in the market was eligible for a tax credit of up to $7,500, as long as it was manufactured in North America. However, with the dawn of 2024, significant changes are reshaping the landscape. The new year brings substantial restrictions on which electric vehicles (EVs) and hybrids qualify for the tax break, reflecting a concerted effort by the U.S. to regulate the use of battery components originating from China.
In essence, if you were relying on a tax credit to facilitate your transition to a new electric vehicle or plug-in hybrid in 2024, your range of options has significantly narrowed.
The IRS has recently unveiled the comprehensive, official list of qualifying EVs and PHEVs. Interestingly, the list is more conspicuous for its exclusions rather than its inclusions. Notably absent are General Motors’ latest EVs, such as the Blazer and Cadillac Lyriq. While the Ford F-150 Lightning retains its eligibility for the tax break, the Ford Mustang Mach-E does not. As previously noted, only the Tesla Model 3 Performance meets the criteria, excluding other variants of the electric sedan. The eligibility of the Cybertruck and Model S remains unclear at this point. What was once a roster of 43 models has now dwindled to just 19.
However, it’s not entirely pessimistic. Notably, Tesla and Rivian shine in this aspect. The Tesla Model Y, widely recognized as one of the top-selling cars globally, qualifies for the tax credit across all three of its configurations. This development is a positive boost for Tesla and is likely to reinforce its market dominance for the foreseeable future. Additionally, some hybrid mainstays such as the Chrysler Pacifica and Jeep Wrangler 4xe maintain their eligibility. The Chevrolet Bolt EV and EUV are also on the list, although their availability is diminishing due to being discontinued in December.
For the complete list, you can refer to FuelEconomy.gov, where you can also verify if a specific car qualifies by checking its VIN.
Electric Vehicle Information
| Make | Model | Model Year | Credit Amount | MSRP Limit |
|---|---|---|---|---|
| Chevrolet | Bolt EV | 2022–2023 | $7,500 | $55,000 |
| Chevrolet | Bolt EUV | 2022–2023 | $7,500 | $55,000 |
| Chrysler | Pacifica PHEV | 2022–2024 | $7,500 | $80,000 |
| Ford | Escape Plug-in Hybrid | 2022–2024 | $3,750 | $80,000 |
| Ford | F-150 Lightning (Extended Range Battery) | 2022–2024 | $7,500 | $80,000 |
| Ford | F-150 Lightning (Standard Range Battery) | 2022–2024 | $7,500 | $80,000 |
| Jeep | Grand Cherokee PHEV 4xe | 2022–2024 | $3,750 | $80,000 |
| Jeep | Wrangler PHEV 4xe | 2022–2024 | $3,750 | $80,000 |
| Lincoln | Corsair Grand Touring | 2022–2024 | $3,750 | $80,000 |
| Rivian | R1S Dual Large | 2023–2024 | $3,750 | $80,000 |
| Rivian | R1S Quad Large | 2023–2024 | $3,750 | $80,000 |
| Rivian | R1T Dual Large | 2023–2024 | $3,750 | $80,000 |
| Rivian | R1T Dual Max | 2023–2024 | $3,750 | $80,000 |
| Rivian | R1T Quad Large | 2023–2024 | $3,750 | $80,000 |
| Tesla | Model 3 Performance | 2023–2024 | $7,500 | $55,000 |
| Tesla | Model X Long Range | 2023–2024 | $7,500 | $80,000 |
| Tesla | Model Y All-Wheel Drive | 2023–2024 | $7,500 | $80,000 |
| Tesla | Model Y Performance | 2023–2024 | $7,500 | $80,000 |
| Tesla | Model Y Rear-Wheel Drive | 2024 | $7,500 | $80,000 |
This table organizes the information into a more readable format with columns for “Make,” “Model,” “Model Year,” “Credit Amount,” and “MSRP Limit.”
Understanding Changes to EV Tax Credits in 2024: A Brief Overview
In 2022, the Inflation Reduction Act brought about significant revisions to the Electric Vehicle (EV) tax credit, aiming to achieve various goals such as promoting local manufacturing and reducing dependence on China’s battery supply chain. However, the current list of qualifying vehicles is notably limited, prompting the need for a closer look into the historical context.
Revised EV Tax Credits:
The revised EV tax credits, implemented in January of the previous year, initially prioritized North American batteries and components. The criteria continued to evolve, culminating in a notable exclusion set to begin in 2024. According to the newly established rules, vehicles containing battery components from a “foreign entity of concern” would be ineligible for tax credits. This designation primarily targets China, a key player in the global battery supply chain.
Caveats and Potential Updates:
Despite the current limitations, several important caveats should be considered. Automakers must submit documentation to confirm their vehicles’ eligibility, with some submissions continuing beyond the December 18 deadline. Notably, Volkswagen expresses optimism regarding the qualification of the ID.4 for tax credits, and other manufacturers, including GM, anticipate the reinstatement of eligibility for certain models in early 2024.
Leasing Benefits and Instant Price Cuts:
A silver lining for prospective buyers is that leasing continues to provide the full tax credit, regardless of the vehicle’s country of origin. Moreover, the credits are now applied at the point of sale, offering consumers an immediate price reduction without the need to wait for tax season.
Looking Ahead:
While the current, more concise list of qualifying vehicles may disappoint many buyers in 2024, it is essential to monitor potential additions over the coming months. The dynamic nature of EV tax credits, as evidenced by developments in 2023, underscores the importance of staying informed about any changes in the electric vehicle landscape.