In a significant development on the electric vehicle (EV) tax credit landscape, the U.S. Treasury Department has reported that a staggering 8,700 car dealers nationwide have joined forces with the government to offer incentives directly to car buyers at the point of sale. This surge in participation, with an additional 1,300 dealers signing up in the past week alone, marks a pivotal shift, making it increasingly convenient for consumers to enjoy substantial discounts when purchasing qualifying new or used EVs.
Until recently, the EV tax credit operated as a credit that buyers could apply for to reduce their federal tax liability. However, as of January 1, the incentive has evolved into a more tangible form – essentially cash on the hood – accessible through participating dealerships.
For eligible buyers and qualifying vehicles, this translates into a potential discount of up to $7,500 on the purchase price of a new EV or up to $4,000 off the price of a used one. The government subsequently reimburses the dealership for extending this discount to the consumer.
This revamped approach to the EV tax credit holds the promise of enhanced accessibility, rendering EVs more appealing to a broader demographic. The allure of an immediate discount, rather than a future refund, is poised to make electric vehicles more enticing. Previously, under the traditional model, buyers who owed less than $7,500 in federal taxes couldn’t fully capitalize on the credit.
As the wheels of this new process are set in motion, dealerships are already implementing government-funded discounts for eager car shoppers. The Internal Revenue Service (IRS) has received and acknowledged numerous payment requests from dealers, with imminent plans to commence the disbursement of payments, according to Treasury officials.
However, as the EV tax credit undergoes a transformation for increased accessibility in 2024, it’s essential to note that fewer vehicles qualify compared to the previous year. Fresh restrictions on battery sourcing, implemented this year, have excluded several cars from the eligible list, including the Ford Mustang Mach-E and certain Tesla Model 3 sedans. Despite these changes, popular models such as the Tesla Model Y and Chevrolet Bolt continue to meet the criteria, ensuring ongoing support for EV adoption.