EV Tax Incentives: Tightening Restrictions in 2024
Outside of the technology, driving experience, and performance, one of the main reasons many drivers purchase an electric car is the lower cost of ownership. Electricity currently costs a lot less than gasoline per mile driven, contributing to lower operating costs, especially when charging at home. But EVs themselves are still generally more expensive than gasoline vehicles to purchase. The federal government has, for years, offered a tax incentive to purchasers of EVs – but next year, the list of vehicles eligible for the full $7,500 tax break is getting shorter.
Why is that? In 2023, new regulations came into place stipulating that EVs must be assembled in North America, and their batteries must have a majority of their components sourced within North America, with their critical minerals coming from countries with free-trade agreements with the U.S.; the latest clarification of the rules says that minerals and components cannot come from “foreign entities of concern” (FEOC). That means if battery parts come from China, Russia, North Korea and Iran, the batteries are ineligible for the incentive.
All of that means that starting in January 2024, some electric vehicles will no longer be eligible for the full federal tax incentive. Models that fall off the list include:
- Ford Mustang Mach-E
- Nissan Leaf
- Tesla Model 3 rear-wheel drive and Tesla Model 3 long range (though they still get a $3,750 rebate for now)
Which vehicles remain eligible for the full $7,500 incentive? Let’s have a look.
Cadillac is all about speed, silence, and smoothness, so electric is a great fit for the brand. The Lyriq is a midsize electric luxury SUV that is sized between the Tesla Model Y and Tesla Model X, but with far more exciting styling and a gorgeous, luxury-lined interior. Depending on specification, it offers up to 312 miles of EPA-estimated driving range, and a choice of rear- or all-wheel drive with 340 or 507 hp. Charging speed is an impressive 19.2 kW on a home Level 2 charger or 190 kW on a Level 3 fast charger. The Lyriq also offers 3,500 lbs of towing capacity, and a starting MSRP of under $60,000.
Chevrolet Blazer EV
Similar in size to the luxurious Cadillac, but targeted at a more mainstream audience, the Chevrolet Blazer EV is just starting to make it into showrooms. The base-model 1LT trim is not yet available, but is rumored to have a starting MSRP of under $45,000. Right now, the most attractively priced option is the Blazer EV 2LT all-wheel drive, with a 102-kWh battery and an EPA-estimated 279 miles of range and a starting MSRP of $56,715. The range champion is the Blazer RS rear-wheel drive, which has an EPA-estimated range of 320 miles and a starting MSRP of $61,790. The Blazer EV RS with all-wheel drive drops estimated range to 279 miles, with a starting MSRP of $60,215. More models, including a 557-hp Blazer EV SS, will follow.
Production of the current-generation Chevrolet Bolt is about to finish, so you might have a hard time finding a new one to purchase – especially because it is the most affordable EV in America. We love this tall hatchback’s small footprint, spacious cabin, big-car range, and impressive versatility. It also has an EPA-estimated range of 247 to 259 miles, and an impressively refined driving experience. With a starting MSRP of under $30,000, it’s an amazing package, and you can even get a taller, longer version called the Bolt EUV (electric utility vehicle) for a starting MSRP of $28,195. If you can’t find a new Bolt, Chevy has announced that the popular model will return in 2025 – and there are many available on the used market, eligible for the new $4,000 used-EV incentive.
Chevrolet Equinox EV
The new electric Equinox will be an important new member of Chevrolet’s EV lineup. The company pitches the Equinox EV as an EV for everyone – with great features but that won’t require families to change their daily routine — except never having to stop at the gas station. The entry-level Equinox comes equipped with 210 electric horsepower and 242 lb-ft of torque, driving through the front wheels. Electric all-wheel drive is an optional upgrade, and ups those numbers to 290 hp and 346 lb-ft of torque. A starting MSRP has yet to be announced, but it will launch with a limited edition 2RS trim. In front-wheel drive form, GM estimates a range of 300 miles, or 280 miles when equipped with all-wheel drive.
Chevrolet Silverado EV
While it has strong Chevrolet pickup truck looks, the Silverado EV is actually a brand-new truck, built on General Motors’ dedicated Ultium EV platform. Not adapted from a gasoline vehicle, its ground-up design gives it more efficient packaging with a huge “frunk,” a roomy pickup bed, and a collapsible “midgate” that allows the bed to be expanded into the cabin by folding down a wall. The two-motors Silverado EV 4WT offers 510 hp and 615 lb-ft of torque with all-wheel drive and a towing capacity of up to 10,000 pounds. A huge 200-kWh battery pack delivers an estimated 450 miles of driving range. The $79,800 starting MSRP is high for the 4WT trim, but more affordable Silverado EVs will follow in 2024.
Ford F-150 Lightning
The first mainstream electric pickup, the Ford F-150 Lightning was recently enhanced with a new Flash trim that gives you all the best tech at a relatively popular price. It has a starting MSRP of under $70,000, which includes the extended-range battery, giving an EPA-estimated range of 320 miles. That’s more than enough for most work or personal use, and the 131-kW battery pack can also charge at a relatively fast 155 kW. Included in the price is Ford’s BlueCruise “hands-free” driving technology, which can make long freeway stretches on approved roads more relaxing. Many other trim levels are available, with starting MSRPs of between $49,995 and $77,495 – all of which are eligible for the $7,500 incentive. The top trims, Platinum, and Platinum Black, are too expensive for the incentive to apply.
Tesla Model 3 Performance
While the Model 3 Long Range and Model 3 Rear-Wheel Drive are no longer eligible for the full $7,500 incentive, the faster, more powerful Model 3 Performance still is, thanks to its different battery and the materials it contains. For a starting MSRP of $47,990, the Model 3 Performance offers supercar-slaying acceleration, a spacious, minimalist interior, and impressive levels of tech. EPA-estimated range is still 315 miles, and it also comes with a sport-tuned suspension and 20-inch wheels.
Tesla Model Y
The Model Y is both Tesla’s best-selling vehicle and the best-selling vehicle in the world. With the company’s most recent price drops, you can now get a base rear-wheel drive model with a starting MSRP as low as $40,910. The most affordable all-wheel drive Model Y now has a starting MSRP of $46,540, or $49,870 for the Model Y Performance. No matter which model you choose, you get a spacious cabin, great tech, and impressive acceleration.
Tesla Model X
Arguably the original full-electric SUV, the Model X is feeling a little bit long in the tooth, but it is still an impressive performer, with huge power and incredible acceleration – even if you don’t opt for the Plaid model. Tesla’s latest round of price cuts has brought the starting MSRP of the Model X to below the $80,000 threshold, at $75,660. That price, and its locally sourced battery components, means it remains eligible for the federal incentive. Plus, you get a spacious interior and those impressive power-operated “falcon wing” doors.
While the list of electric vehicles eligible for the federal $7,500 rebate is indeed getting shorter, there are still a lot of great EV choices at all price points and in all shapes and sizes. Plus, remember that starting next year, getting that incentive is going to be much easier, as licensed dealers can now apply the incentive as a discount on the price of the car, instead of you having to claim it at tax time.