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With the new year rung in, some big changes are happening in the industry. Not only are tax credits dwindling to just a few models, but one of the few models to keep the full tax credit (the Chevy Bolt) is now out of production. So, if you’re looking for an awesome price on an EV, this will be your last chance for a few years.
The Few Models Getting The Credit
One of the big things the EV industry and especially Tesla fans were worried about when the Inflation Reduction Act passed was the way EV tax credits were changed. A few companies had gone over the 200,000 mark and thus their EVs weren’t eligible for the tax credit, so the new credit was good news. But, there’s a catch: the batteries had to come from countries friendly to the U.S.
The federal government did this because we don’t want China to have our whole EV industry by the shorts. And, absent any changes, that’s exactly the path we were on. Battery minerals are in the ground globally, but China’s battery industry is ahead of both North American and European sources by around a decade.
By only making the tax credits available to cars with batteries from friendly countries, the goal was to stimulate more battery mining and cell production. However, this comes at the cost of many models that relied on Chinese cells losing their credits on January 1, 2024 until the companies can get battery supplies sorted out.
Sadly, the number of qualifying EVs is down now and bad. Only a few EVs are eligible for the full credit, plus one PHEV:
Chevy Bolt EV
Chevy Bolt EUV
F-150 Lighting Standard Range
F-150 Lightning Extended Range
Several flavors of the Tesla Model 3, Model X, and Model Y
Chrysler Pacifica PHEV
Several EVs and PHEVs don’t qualify for the full credit, but still qualify for half under current rules/laws:
Ford Escape PHEV
Jeep Grand Cherokee and Wrangler 4xe models
Lincoln Corsair Grand Touring
Rivian Vehicles (R1S and R1T)
It doesn’t appear that auto manufacturers are flocking toward PHEVs to qualify for the tax credit, as more PHEVs appear on the half-credit list and only one appears on the full-credit list. That having been said, the auto industry does move slowly, so more PHEV models could be on the way.
The Credit Can Come Right Off The Price Now
If you’re interested in any of the cars listed above, there’s some great news: instead of having to wait for a tax credit you might not benefit from, you can now get the full credit right off the top before you drive off the lot.
Until just yesterday, the tax credits were only a tax credit. If you owed more that $3750 or $7500 on taxes, you’d have to pay less for the year you bought the car. But, if you didn’t owe that much money, the tax credit doesn’t help you. Plus, you’re still stuck paying the extra money for the car and the interest on that extra money if you took a loan out.
But, now you can transfer the credit to the dealer, and it can in turn give you that amount right off the top of the car’s price. But, the dealer both has to be participating in the program and the dealer’s reps have to not be trying to rip you off. At worst, they could get you to pay full price and swipe your tax credit, effectively ripping you off for $3750 or $7500. So, be sure to make sure you’re not paying full price!
The most you should be paying is the MSRP price minus the applicable tax credit. For example, if you were to buy an F-150 Lighting Standard Range with no extra options, the starting price is $52,090. So, you shouldn’t be paying the dealer more than that amount, minus the $7,500. This comes out to $44,590. You can find MSRP prices online, and you may be able to haggle the price down another 10-15% if the dealer has had the car sitting for a bit.
Last Call For The $20,000 Chevy Bolt!
There’s one last bit of bad news: two of the cars on the already short list of full-credit vehicles are about to come off of it. On December 20th, the Bolt EV and EUV both went out of production, so what’s in transit or sitting on dealer lots is all there’s gonna be. The 1.5G Chevrolet Bolt will come back in a year or two with some improvements, but there’s no telling whether they’ll qualify for a credit or if there will be delays. The price may be higher, too.
So, if you want to pick up a dirt cheap new EV, this will be your last chance to do that for a while.
How dirt cheap? The cheapest Bolt EV with cloth seats and no options starts at $26,500. With the $7500 off, the out-the-door price for that bare-bones car would be only $19,000. It may be possible to get it for as low as $18,000 if you find a dealer willing to give you more of a price cut.
The cheapest EUV can be had for $27,800 with no options. But, after the $7,500 off, that goes down to $20,300. Personally, I’d recommend it over the regular EV. Not only do I think it looks better, but it has a lot more legroom in the second row, which makes for a better ride for teenagers or adults. It costs a few more bucks, but for me it was worth it.
Just to be clear, you need to make sure everything is in place to get this deal. The dealer needs to be set up to accept your tax credit transfer, and it needs to not be trying to rip you off. You also might want to check with an accountant or a lawyer, or check out the IRS website to get full details. But, if you’re interested in getting this kind of a deal, you’d better hurry. Everyone else is going to find out that they can get this deal, and the vehicles that are on the lot or in transit are all that’s left to buy.
Featured Image: My Chevy Bolt EUV, by Jennifer Sensiba.
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