WASHINGTON – The U.S. Treasury announced on Wednesday that it has compensated auto dealers approximately $135 million for upfront consumer electric vehicle (EV) tax credit payments since the beginning of the year, up to February 6.
Previously, until 2024, U.S. car buyers could only benefit from the $7,500 new electric vehicle credit or $4,000 used EV credit during tax filing in the subsequent year.
From January 1, 2024, consumers have been able to apply these credits directly at the car dealership during purchase, effectively reducing the vehicle’s cost at the point of sale.
The Internal Revenue Service has processed over 25,000 time of sale reports, with more than 19,500 – representing 78% – including requests for advance payments. As a result, around $135 million has been distributed to dealers since January 1, as revealed by the Treasury.
Deputy Treasury Secretary Wally Adeyemo remarked, “With one month since the launch of this initiative, there’s a notable demand for this immediate discount, promising continued growth in the U.S. EV industry.”
The requests for advance payments comprise 17,500 for new EVs and 2,000 for used vehicles. Over 11,000 U.S. auto dealers are participating in the program, with upwards of 8,000 registered for advanced payments.
Several EV models lost their tax credit eligibility in January due to new battery sourcing regulations. This affected vehicles like the Nissan Leaf, certain Tesla Model 3 models, Chevrolet Blazer EV, Cadillac Lyriq, Ford Mach-E, and Ford E-Transit.
The Treasury’s December guidelines aim to reduce U.S. reliance on Chinese EV supply chains. Initially, the number of EV models eligible for U.S. tax credits dropped from 43 to 19 on January 1. However, Volkswagen’s ID.4 EV versions have since regained eligibility.
To qualify for the tax credit at purchase, consumers must confirm they meet specific income limits, or they risk repaying the government during tax filing. For new vehicles, the income ceiling is $300,000 for married couples and $150,000 for individuals.
The August 2022 Inflation Reduction Act revamped the EV tax credit system. It now requires vehicles to be assembled in North America for credit eligibility, disqualifying nearly 70% of previously eligible models. The Act also introduced a used EV tax credit, removed the 200,000-vehicle cap per manufacturer, added income and vehicle price limits, and extended the credits to leased vehicles.
