2. Should I buy an EV now or wait?
If you’ve already been in the market for an EV and have found one available to buy, “definitely go ahead and finish the transaction and get it done,” Harto said. But, he noted, it’s probably “going to be challenging for somebody who wasn’t in the market for a new car and saw that this change is coming and is trying to jump into the market and take advantage of the situation quickly.”
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For one thing, there are a large number of people who want EVs and a limited supply — a situation that, Harto said, “has created long wait times and just frankly, absurd dealer markups on EVs.” And he anticipates things might only become worse in the immediate future as consumers scramble for cars. There also currently isn’t a tax credit available for used EVs.
“We’re in a turbulent time of rapid change in the market,” he said. “There’s going to be more vehicles, there’s going to be cheaper vehicles in the future. Eventually, a lot of vehicles are going to qualify for the credit again, so there’s not a whole lot of risk in waiting to buy an EV.”
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People trying to buy cars now should be mindful of potential dealer markups, Harto said. “It’s not going to do you a whole lot of good to get a $7,500 tax credit if the dealer is going to charge you [$10,000] or $20,000 over MSRP for the vehicle.”
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If you’re worried that the EV you want might not be eligible in the future, remember that the new credits are expected to remain until 2032. Even if automakers don’t have vehicles that qualify until 2025 or 2026, the bill “still gives them many, many years of eligibility for the credits,” Harto said.
“The common sense thing would be to say: ‘Look, don’t worry. These rebates aren’t going anywhere. They’re fully funded to be around for a while. Do them when they make sense,’” said
Jonathan Foley, executive director of Project Drawdown, a climate nonprofit.
An electric car charging station is positioned outside the Science Museum of Virginia in Richmond. (Steve Helber/AP)
3. How could the availability of eligible EVs be affected?
In the short term, changes to the EV tax credit are probably “going to eliminate a lot of vehicles from being eligible,” Harto said.
For instance, he noted, cars that aren’t assembled in North America are expected to immediately become ineligible. At present, such vehicles could include those from Hyundai, Kia and Toyota, among others,
according to Consumer Reports.
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Other models of cars, regardless of where they are assembled, would not qualify because they are too expensive. To be eligible for a credit, new EVs that are vans, SUVs or pickup trucks can’t exceed $80,000, while other types of vehicles can’t cost more than $55,000. Used EVs could be eligible if they cost no more than $25,000. A list of cars
compiled by Consumer Reports that probably won’t qualify because of their price tags include some Teslas, several BMWs and other models depending on the vehicles’ modifications.
In the long term, however, the new EV incentives are “likely to be a massive improvement over the existing tax credit system,” Harto said. “It will really help middle-class Americans afford EVs. They just may have to wait for a couple more years” for automakers to adapt to the new requirements and vehicle supply to increase.
And although the new manufacturing requirements could be “a high bar to clear,” the existing vehicle cap was probably already making it difficult for many people to buy popular EVs that would be eligible for the tax credit, said
Leah Stokes, an associate professor of environmental politics at the University of California at Santa Barbara. “A current EV tax credit basically doesn’t exist for most EVs that Americans buy,” Stokes said, noting that several manufacturers of popular vehicles have reached the sales limit.
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What’s more, one aspect of the EV market is likely to remain unchanged, regardless of the tax law that is in place, Foley said: Every year, “some cars will be eligible, some won’t.”
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“Right now, it’s because of the cap on individual companies,” he said. “In the future, it might be who’s got the batteries that are meeting the standard.”
4. Which EVs could be eligible?
Trying to figure out which vehicles would qualify for tax credits under the bill could be tricky, as eligibility is expected to change depending on whether automakers are able to meet the manufacturing requirements.
Based on cost alone, eligible vehicles could include several Chevrolet models, Teslas, Fords and the Nissan Leaf, among others, according to Consumer Reports. But keep in mind that certain modifications and special features could push a vehicle over the price cap.
Many used EVs that are below the stated price cap would also be eligible and aren’t subject to the same manufacturing requirements as new models.