More EVs might be eligible for tax credits in 2023 as the US Treasury delays EV battery guidance

According to reports, the US Treasury department has said that it will postpone the guidance on sourcing standards for battery materials. More Electric Vehicles (EVs) will be eligible for federal tax incentives as a result of the delay.

How Will EV Tax Credits Be Affected by the Delay?

The new criteria will go into force on January 1, 2023, however since there are no current battery sourcing regulations, there may be a small gap in 2019 when EV purchases may not be compliant. As a result, manufacturers may still be eligible for tax credits to some extent. Recall that the Senate passed the Inflation Reduction Act (IRA) in August of this year, and a week later, President Obama signed it into law. [caption id="" align="aligncenter" width="1400"] Image credit- Electrek[/caption] Despite other tax credit conditions outlined in the IRA, the US Treasury Department has now stated that they need until at least March to determine EV battery needs. Caps on MSRP and annual pay, as well as requirements like EV assembly in North America, will all continue to take effect on January 1 as scheduled. According to reports, EVs sold between January 1 and March will not adhere to the upcoming battery guidance but will still be eligible for federal tax credits because there is no guidance on the necessary battery specifications. This is advantageous for both consumers and automakers. To meet the requirements, EV manufacturers have begun shifting some of their production to North America, but the process can be drawn out. [caption id="" align="aligncenter" width="640"] Image credit- Green car reports[/caption] According to the US Treasury, more information on the revised course of their battery guideline will be made public by December 31. Additionally, the specifications for essential minerals and battery parts won't be applicable until the Treasury publishes the proposed rule.

What Changes Are Scheduled for January 2023?

On January 1, 2023, a few EV tax credit restrictions will come into force. One is the new ceilings on buyer income and retail prices for eligible autos. However, with the US Treasury's announcement, some consumers might still receive tax credits for purchasing EVs that will not adhere to the battery sourcing requirements when they are fully implemented. Following the restoration of the per-manufacturer cap on EV tax incentives by the Congress in August, this will allow vehicles made by General Motors Co. and Tesla Inc. to once again qualify for EV tax credits starting on January 1. By December 31, it is still unknown if Treasure will respond to other concerns, such as whether or not it will permit automakers to benefit from commercial clean vehicle credits by leasing cars to customers.