According to the US Treasury Department, customers’ electric vehicle leases can qualify for commercial clean vehicle tax credits. It can go up to a $7,500 tax credit from Jan 1. Interestingly this makes those assembled outside North America also eligible. However, that doesn’t apply same to purchases.
The new Treasury guidance does not change the definition of North American assembly. The $430 billion U.S. Inflation Reduction Act (IRA) passed in August ended $7,500 consumer tax credits for purchases of electric vehicles assembled outside North America, angering South Korea, the European Union, Japan, and others. The law also restricts battery minerals and component sourcing sets income and price caps for qualifying vehicles and seeks to phase out Chinese battery minerals or components. Commercial credit does not have the sourcing restrictions of consumer credit.
U.S. Senator Joe Manchin, a Democrat who chairs the energy panel, urged Treasury to pause implementation of both commercial and new consumer EV tax credits, saying Treasury had rewarded “companies looking for loopholes.” He said he would seek legislation to stop “this dangerous interpretation from Treasury.”The European Commission praised the Treasury consumer leasing guidance saying it would not require “changes to established or foreseen business models of EU producers. This is a win-win for both sides.”
EV makers
The commission said it continues to seek “similar, non-discriminatory treatment of EU clean vehicle producers” for EV purchasers. Earlier, Toyota Motor said the rule was needed “to expand domestic production of EV batteries and maintain America’s energy independence.”
Alliance for Automotive Innovation CEO John Bozzella called the leasing guidance “consistent with our recommendation and a positive development for broad adoption of EVs in the U.S.” That law lifts the 200,000-vehicle per manufacturer cap that had made Tesla and General Motors ineligible for EV tax credits starting Jan. 1. The Internal Revenue Service released an initial list of eligible 2023 EVs Thursday that includes vehicles from 13 automakers including Tesla, Volkswagen, Volvo Car, Ford Motor, Rivian, Chrysler-parent Stellantis and Nissan EVs for the consumer tax credit and plans to release a more comprehensive list by Saturday.
Bozzella, who heads the group representing nearly all major automakers, said the rules would be confusing at first. “I think it’s going to be bumpy until every manufacturer is at least operating under the same basic ground rules.” Half the credit is contingent on at least 40% of the value of the critical minerals in the battery having been extracted or processed in the United States or a country with a U.S. free-trade agreement, or recycled in North America, a percentage requirement that rises annually.
