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For those already baffled by the changing landscape of electric vehicle incentives, the focus now shifts to monitoring supply chains. Volkswagen’s recent announcement adds to the confusion as the ID.4 suddenly qualifies for the full $7,500 tax credit, just a day after being initially deemed ineligible.
Volkswagen of America President Pablo Di Si highlighted, “The ID.4, already positioned as one of the most competitively-priced electric SUVs in the market, becomes even more accessible with the $7,500 Federal Tax Credit. This reaffirms our strategic move to localize ID.4 production in Tennessee and intensify our investments in battery manufacturing, components, and technological advancements. Each ID.4 sale contributes to supporting numerous American jobs and propels us closer to a carbon-neutral future.”
The selection of cars eligible for the full $7,500 tax credit dwindled substantially earlier this week, from nearly 30 to only nine. With the addition of the ID.4, more options now fall within the affordable price spectrum, boasting a starting price under $40,000 before factoring in federal and state incentives.
Demonstrating the scenario where the average new car price recently dipped slightly above $48,000, the average expenditure on a new electric vehicle remained around $60,000, as reported by Kelley Blue Book. Models such as sedans surpassing $55,000 and SUVs exceeding $80,000 fall outside the scope of federal credits.
In response, automakers will fortify their production and battery sourcing facilities to qualify for the federal tax credit and entice potential buyers. Nissan’s plan to localize electric vehicle production in the U.S. by 2026 aligns with the strategy to leverage the credit; however, leasing electric vehicles remains a viable option for benefitting from the tax break. (Leased vehicles are classified as fleet units owned by the leasing entity and exempt from the regulations.)
The process becomes increasingly bewildering for prospective electric car purchasers aiming to capitalize on available tax incentives. The car’s origin and now even the origins of its components play crucial roles in navigating this intricate landscape.
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