Fewer Electric Vehicles Will Qualify for Federal Tax Credits in 2024

Efforts to fight global warming could suffer a setback next year when new rules reduce the number of electric cars that qualify for a federal tax credit.

The credits, up to $7,500 a vehicle, have helped make electric cars more affordable, bringing the cost of some models below $30,000. Next year, for the first time, dealers will be able to give buyers the credit when they purchase a car, rather than telling them to claim it on their tax returns.

But qualifying for the subsidy will become more difficult on Jan. 1 because of Biden administration rules intended to encourage automakers to manufacture vehicles and parts in North America, while bypassing China. Most automakers are still years away from breaking their dependence on China for batteries and essential materials like refined lithium.

The stricter rules, which stem from the Inflation Reduction Act, throw up another impediment to electric vehicles. Sales of such cars and trucks are already growing less briskly than a year ago because of high interest rates and drivers’ anxiety about finding charging stations.

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