The Biden administration released a new set of rules on
Friday that requires manufacturers to jump through even more hoops
to qualify for federal subsidies. The new requirements for
cars purchased on or after April 18 th concern batteries
and critical minerals and experts say they will further limit
the types of electric vehicles eligible for tax credits.
This comes on the back of the passage of the
inflation reduction Act in August which sought among other things
to reduce reliance on China and combat climate change by
encouraging renewable energy and the adoption of electric vehicles.
The ira eliminated caps on subsidies per manufacturer but implemented
other new restrictions like limiting the price of eligible vehicles
and ensuring buyers meet certain income restrictions. For example
, Americans seeking subsidies can only make up to$300,000
annually for couples filing jointly$225,000 for heads of households
or$150,000 for individuals. In terms of pricing,
vehicles can only cost up to$80,000 for trucks,
vans or suvs or$55,000 for other vehicles. The
bill also requires eligible vehicles to be assembled in North
America which Reuters reported eliminates about 70% of EVs currently on the
market. The new update from Friday means that cars
must now also meet more stringent requirements for batteries and
the minerals used to make them specifically in order to
qualify for a$3,750 subsidy. Half of the value
of battery components must be produced or assembled in North
America. 40% of the mineral value must be sourced
from the US or a free trade partner for an
additional$3,750 tax credit. If a car qualifies in
both areas, well, then it's eligible for the
full$7500 credit. So you might be wondering what
this means for buyers in the current economic environment.
While supply disruptions low inventory, new technology, higher
interest rates and automakers focused on high earning buyers means
it's more expensive than ever to buy a car.
According to cox auto average manufacturers suggested retail price or
MS R P is now close to$50,000. In
December 2017, there were about 36 models with MS
rps below$25,000 in December 2022. By contrast,
there were only 10 models in that range. This
plus higher interest rates have shut out certain shoppers.
And since E V S tend to be more expensive
than internal combustion vehicles, a cut in E V
subsidies could make E V ownership even car ownership in
general. Less viable for many Americans Duarte. Thank
you so much. That was senior news reporter Chloe 00:02:45.308 --> Alo.