A new guideline has been released by the United States Treasury Department regarding electric vehicle tax credits in the Inflation Reduction Act. This suggests leased vehicles may qualify for EV tax credits, including foreign ones assembled outside North America.

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WASHINGTON, DC - APRIL 22: Electric vehicles are displayed before a news conference with White House Climate Adviser Gina McCarthy and U.S. Secretary of Transportation Pete Buttigieg about the American Jobs Plan and to highlight electric vehicles at Union Station near Capitol Hill on April 22, 2021 in Washington, DC. The Biden administration has proposed over $170 billion in spending to boost the production of zero-emission buses and cars and increase the number of EV charging stations.

Qualifying Imported Vehicles to Tax Credits

The United States Treasury Department said that imported electric vehicles will qualify for EV tax credits in the Inflation Reduction Act via commercial leases. Based on a report from Bloomberg, the department released the guidelines but delayed the final ruling until March to give more time for the officials on addressing the complexities of the law.

This would help foreign carmakers to exclude their vehicles from the subsidy. Consumers can start to qualify on January 1, 2023, for up to $7,500. However, the new guidance does not change for the North American assembly when it comes to purchases.  

Aside from this, the law restricts battery minerals and component sourcing. Instead, they have set income and price caps for qualifying vehicles in an effort to phase out Chinese battery minerals or components. 

Two major sections are included in the law to detail the tax credits, as reported by Electrek. Under section 30D, the standard credit is covered and describes that qualifying vehicles can not be acquired for resale purposes. The vehicle must be made from a qualified manufacturer, a 4-wheeled EV driven by a >7kWh battery, under 14k pounds GVWR, and a North American-made.

Meanwhile, the commercial vehicle credit under section 45W states that it must also be made by a qualified manufacturer, acquired for use or lease by the taxpayer and not for resale, treated as a motor vehicle for Clean Air Act, and a >15kWh battery, under 14k pounds GVWR, and rechargeable. 

Manufacturers with New Qualified Clean Vehicles

The Internal Revenue Service provided a list of manufacturers for New Qualified Clean Vehicles that can be purchased in 2023 or after. These manufacturers provide vehicles that have undergone final assembly in North America and not exceeded a suggested retail price of $80,000 for vans, sport utility vehicles, and pickup trucks, and $55,000 for other vehicles. This include: 

• Audi of America LLC

• Ford Motor Company (Including Ford and Lincoln brands)

• General Motors LLC, Kia America Inc.

• Mazda Motor of America Inc.

• Mercedes-Benz USA LLC

• Nissan North America, Proterra Operating Company Inc.

• Rivian Automative LLC, Stellantis NV (including Chrysler and Jeep brands)

• Subaru of America Inc.

• Tesla Inc.

• Volkswagen Group of America

• Volvo Car North America LLC

Also Read: How to Get Used EV Tax Credit? IRS Says Up to $4,000 Can be Received; Qualifications, Other Details

Urging to Pause

Reuters reported that Senate Energy and Natural Resources Committee Chair Joe Manchin has been urging the US Treasury to halt the implementation of commercial and consumer EV tax credits. He then criticized the department's interpretation.

He stated, "the guidelines bend to the desires of the companies looking for loopholes and are clearly inconsistent with the intent of the law. It only serves to weaken our ability to become a more energy secure nation."

Manchin added that the implementation must be paused until the department issued much "appropriate" guidance.

Related Article: More EVs May Qualify for 2023 Tax Credits As US Treasury Delays EV Battery Guidance