Volkswagen electric vehicles no longer have access to tax credits in the U.S. after the U.S. Department of Energy updated the list of eligible EVs. On the other hand, EVs manufactured by South Korea’s Hyundai Group, as well as the Tesla Cybertruck, joined the list and can be purchased with a subsidy.
Electric vehicle prices have been the primary barrier to EV adoption since the Tesla Roadster was first unveiled a decade and a half ago. As a result, several governments worldwide have deployed subsidies and incentives to make electric cars more affordable to average consumers and spur electric vehicle adoption.
For most automakers with an electric vehicle line, qualifying for these subsidies is the only way they can make a profit from their EV lines, particularly now that the early adopter market is mostly saturated. Without the subsidy, Americans will now have to pay ‘full price’ to buy the Volkswagen ID. 4.
EVs developed by Nissan, Rivian, Stellantis, Audi, and Jeep didn’t make it to the list of eligible electric cars as well. Overall, the list of vehicles that qualify for the $7,500 federal tax credit dropped from 49 to 25 models. Vehicles from Stellantis, Rivian, and Nissan that initially qualified for the tax incentive have been struck off the list of eligible cars.
Additionally, just one of the 7 hybrids that were on the list in 2024 is still eligible: the Chrysler Pacifica minivan. Some of the EVs on the list were eliminated because they didn’t meet standards set forth by the 2022 Inflation Reduction Act to preserve the U.S. economy.
Hyundai Group struck gold after the Department of Energy included five of the carmaker’s EV series on the list of EVs that are eligible for the federal tax credit. These are the Hyundai Ioniq 9, the Hyundai Ioniq 5, the Genesis Electrified G70, the Kia EV9, and the Kia EV6.
Hyundai began producing Kia EVs at its Georgia-based Metaplant America (HMGMA) facility in August while the Hyundai facility in Montgomery, Alabama, will produce the Genesis EV. Manufacturing both the Kia EV and Genesis EV lines in the U.S. ensured they met conditions from the Inflation Reduction Act and allowed the Hyundai models to push out units from VW, Nissan, and Stellantis.
The Tesla Cybertruck also joins the list of eligible EVs, but only entry-level versions that are priced below $80,000 will qualify for the subsidy, while the costlier and more popular Foundation Cybertruck series still does not qualify.
Manufacturers from outside the U.S., such as Kandi Technologies Group Inc. (NASDAQ: KNDI), have the task of coming up with mechanisms to remain competitive in major markets like Canada and the U.S. where their electric vehicles aren’t eligible for the available tax credits while also having to face stiff import tariffs.
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