EV Tax Credit Rules to Tighten
Restrictions taking effect next month will eliminate some models from eligibility due to battery material sourcing outside the new parameters.

Once new battery-sourcing rules take effect next month, some previously eligible EV models will no longer comply.
IMAGE: Pixabay/Photoman
Federal tax credits for new electric-vehicle purchases will soon tighten, eliminating many models from eligibility.
Starting April 18, the credits will shrink or be eliminated for some models.
Treasury Department guidance introduced on Friday lays out specific requirements for vehicles to be eligible for up to $7,500 in tax credits that have already spurred consumers to buy electric.
The credits were authorized in the Inflation Reduction Act passed last year and are aimed at greater EV adoption in an effort to reduce environmentally harmful emissions.
Tightening the rules around qualification for the credits is intended to steer carmakers away from EV battery supply chains in China, which has a significant share of the market for minerals needed for the batteries’ manufacture.
Under the act’s foundational requirements already in place, EVs must undergo final assembly in North America, and be under certain price levels per vehicle category, while buyers’ income is capped for tax credit eligibility.
Now battery material sourcing limits will be added next month, essentially determining which EV models qualify for the credits based on where their materials were sourced.
Depending on the material, the new restrictions get tighter each year. By 2027, 80% of “critical” minerals in EVs batteries must be sourced, processed or recycled in the U.S. or in a free-trade partner of the U.S. And by 2028, 90% of the value of a battery’s components must be made or assembled in North America.
Until now, credit eligibility has been determined using the requirements not involving battery components. Meanwhile, the Treasury Department was hammering out the parameters of the latter. So once those take effect next month, some previously eligible EV models will no longer comply.
Originally posted on Auto Dealer Today
More Showroom

Mitsubishi Sets Growth Strategy, Structural Transformation
The Japanese automaker aims to 'strengthen products and technologies that embody its brand identity,' focus on its strongest markets and expand value-chain businesses 'that leverage its unique strengths.'
Read More →
Affordable, Safe Cars for Teen Drivers
Families looking to balance affordability and safety in vehicles for their teen drivers can look to the updated list of recommended vehicles by IIHS and Consumer Reports.
Read More →
Auto Dealers Feel Better But Not Great
A second-quarter Cox Automotive poll of franchised retailers and independents found better views of the current market after a good spring but anticipation of third-quarter storminess.
Read More →
Holman Opens Porsche Dealership in Miami
The North Miami store features the brand’s signature Destination Porsche design concept, combining contemporary architecture and technology to create what the auto group calls an ultra-luxury experience.
Read More →
Chicago to Gain Cadillac Rooftop in 2027
The two-story Cadillac dealership is being constructed at the former Lincoln Yards site, owned and operated by Canada-based Jack Carter Auto Group.
Read More →
Mid-Atlantic Ford Store Has New Owner
A growing Maryland automotive group is only the 93-year-old dealership’s third owner after its longtime proprietors retired.
Read More →
Porsche Dealership Breaks Ground in Illinois
Barrington Porsche will be the new location for Murgado Automotive Group’s existing Porsche dealership currently in the Motor Werks of Barrington auto mall.
Read More →
Michigan Auto Group Acquires Ohio Rooftops
Feldman Automotive Group added two new brands, Honda and Toyota, to its portfolio with its latest acquisition of four Fireside dealerships in Ohio.
Read More →
California VW Dealers Go After Scout
The franchisees’ state-level actions follow a California auto dealers trade group lawsuit against the VW affiliate last year, both efforts to stop the EV maker’s plan to sell direct to consumers.
Read More →
EVs Gain Traction in Europe
First-quarter auto sales increased as more consumers took advantage of government incentives. Hybrid deliveries are leading the way on the electrifieds boom.
Read More →