Volkswagen becomes first foreign carmaker to qualify for electric vehicle credit

Volkswagen becomes first foreign carmaker to qualify for electric vehicle credit

The Treasury Department announced on Wednesday that Volkswagen had become the first non-American brand to have an electric vehicle qualify for the Biden administration's new tax credit for non-fossil-fuel cars and trucks.

The announcement came two days after the administration revealed a list of eligible car models that was exclusively made up of American-based manufacturers like Ford, GM, and Tesla. Additionally, it might reduce some of the trade frictions between the two continents that have existed since last summer due to the protectionist nature of American renewable energy incentives.

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The list may grow further as other automakers not eligible for the tax cut figure out how to satisfy the U.S. eligibility standards, which stipulate that a certain proportion of the vital components or minerals used to create the batteries must originate in the United States or from a nearby trading partner. This week, vehicles from BMW, Volvo, Hyundai, and Nissan were among those that were disqualified.

Volkswagen representatives had stated on Monday that they anticipated the ID.4 to be eligible for the full $7,500 federal tax credit but that the firm was still awaiting the necessary paperwork from its battery supplier to submit to the Treasury Department.

The remaining 14 EV vehicles that are on the market and are eligible for the tax credit are all manufactured by Tesla or one of the Detroit Big Three: Ford, GM, or Stellantis. Some of those domestically produced EVs are qualified for the full $7,500 credit, while others are qualified for a $3,750 partial credit.

Especially in Europe, where government officials complained to their auto brands being excluded from the tax incentive, the IRA's revisions to the tax credit infuriated U.S. friends.

The initial Treasury list also didn't include any Rivian electric pickup trucks or SUVs, which are only produced in the United States. The business said on Wednesday that the 2023 R1T and R1S models meet the requirements for the tax credit for obtaining key minerals, but that the majority of the vehicle configurations do not match the government's requirement that SUVs, pickup trucks, or vans cost no more than $80,000. (The cap for automobiles is $55,000.)

For customers who had previously locked in a price below $80,000 but hadn't yet taken delivery, Rivian said the tax credit might still be available, pending inclusion on the Treasury website. The law's income cutoff, which excludes buyers with adjusted gross incomes of more than $150,000 to $300,000, would still apply to those buyers, though.