Rules relaxed until 2027
The IRS has updated the electric vehicle rebate rules to include new requirements that should allow more electric vehicles to qualify.
The reform, launched in 2023, brought many important changes, most notably removing the 200,000 vehicle limit per manufacturer and adding eligibility criteria for electric vehicle buyers and a suggested retail price for electric vehicles to limit tax breaks for the wealthy when buying expensive cars.
To qualify for the rebate, vehicles had to be assembled in North America. This requires a gradual increase in the share of battery materials and components produced in North America and in countries with free trade agreements with the United States. The Treasury Department and IRS have decided to relax some of these rules, especially with respect to graphite, electrolyte salts, binders and additives, through 2027. This should allow more electric vehicles to retain access to the tax credit until 2027.
Meanwhile, many automakers and battery suppliers are investing in sourcing and processing these materials in North America. On the graphite side, for example, GM and Panasonic have invested in Nouveau Monde Graphite, which aims to become the new source of processed graphite in North America.
Currently, only 22 of the 104 electric vehicle models sold in the United States are eligible for the tax credit. Once the new regulations are implemented, more electric vehicles will be eligible for the program.