A significant development for electric vehicle (EV) buyers, the United States government has introduced new rules that allow buyers to transfer their EV tax credit to dealerships. This move enables dealerships to apply the credit as a discount at the point of sale, with the IRS later reimbursing the dealership for the amount, which can go up to $7,500 for a new car or $4,000 for a used one.
The new rules, which came into effect on January 1, 2023, eliminate the need for buyers to wait until tax time to receive their EV tax credit. Moreover, the credit is now accessible regardless of the amount of taxes paid on the buyer’s income, and it can still be claimed even if the buyer owes taxes. However, buyers earning more than $150,000 annually or $300,000 as a married couple are not eligible for the credit.
As of last Friday, around 8,700 dealerships have filled out the necessary paperwork to participate in the program, with an estimated 18,000 franchise dealers in the United States. The number of dealerships signing up increased by 1,300 in just one week, indicating a swift rollout of the new rules. The IRS has also granted dealerships until January 19 to submit reports of eligible EV sales that took place between January 1 and January 16.
In other news, the Environmental Protection Agency (EPA) has updated its rules for defining a vehicle’s Drive modes, such as Eco, Normal, and Sport. Automakers must now test all Drive modes, with the estimated range based on the average of the results. Tesla has already released updated range estimates for the Model S, X, and Y, which are around 6% lower on average. This change is expected to bring Tesla’s range estimates closer to real-world numbers.
Additionally, Volkswagen (VW) has delayed mass production of its small, affordable EV, the ID.2all, due to weaker emission regulations in Europe. The original Euro 7 emission rules would have required new components to meet the standards, making it difficult for VW to profit from small internal combustion engine (ICE) vehicles. However, the Auto industry successfully lobbied to weaken the rules, allowing VW to continue selling small ICE vehicles profitably through the end of the decade. The ID.2all’s mass production is now expected to begin in 2026 instead of 2025.
Stay tuned for more updates on the ever-evolving world of electric vehicles and the automotive industry at large.
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