The Treasury of the United States government announced this week that it has reimbursed car dealers nationwide with $135 million. This reimbursement covers the advanced EV tax credit payments made from the beginning of the year through February 6.
Starting January 1, purchasers have been able to apply these credits directly to the car dealership when buying a vehicle, reducing the price by up to $7,500. Previously, before 2024, the new EV tax credit ($4,000 for used EVs) was only accessible when purchasers filed their tax returns the following year.
As per the Internal Revenue Service (IRS), over 25,000 time-of-sale reports have been recorded, with more than 78% of those accompanied by advance payment requests.
Among the vehicles for which customers have made advance payment requests, 17,500 are new EVs, and 2,000 are used. The Treasury reports that over 11,000 car dealerships have enrolled in the program, with over 8,000 opting for advanced payments.
To qualify, consumers must meet the income limit requirements for tax credits at the time of vehicle purchase. Failure to meet these requirements would require repayment of the incentive during tax filing.
The adjusted gross income limit stands at $300,000 for married couples and $150,000 for individuals. However, this criterion applies solely to new vehicles.
Deputy Treasury Secretary Wally Adeyemo stated, “One month into the implementation of this provision, there is strong demand for this new upfront discount, which will continue the momentum in growing this industry in the United States.”
Following changes in eligibility rules by the government, several electric vehicles have recently lost their tax credits. Consequently, only a few EVs remain eligible for the credit, such as the Volkswagen ID.4 and Ford F-150 Lightning.
However, not all are pleased with the new tax credit regulations. The Alliance for Automotive Innovation has urged the Treasury to ease these rules to accelerate the adoption of electric vehicles.
The latest regulations regarding battery sourcing specify that an EV’s battery must not contain materials procured from foreign entities of concern, including China and Russia. Consequently, numerous electric cars have forfeited their incentives, potentially dissuading numerous customers.
In response to these changes, General Motors has offered customers a $7,500 discount on select electric vehicles to compensate for their loss of eligibility for the tax credit. However, GM has not specified the duration of this offer, stating only that it will last until “early 2024.”
It remains to be seen how much more money the Treasury will disburse to dealers in advanced payments for the remainder of the year.
