Industry group says most EVs will no longer qualify for federal tax credits

Electric vehicle shoppers hoping to get a tax credit from the government after President Joe Biden signs the Inflation Reduction Act into law might find fewer vehicles that qualify.

The Clean Vehicle Credit, a part of the Inflation Reduction Act that passed Congress last week, had a provision that added a credit of up to $4,000 for used EVs. The new law also removes the current 200,000 EV sales cap, which means vehicles made by Tesla, General Motors and Toyota are eligible again for a federal tax credit.

The law also tightens restrictions on which vehicles qualify for the credit. To receive the tax credit, vehicles must be manufactured in North America and made with batteries that have critical components sourced in either North America or supplied by the country's free-trade agreement partners. The new law also means that high-income buyers and more expensive EVs will not be eligible for the credit.