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Earlier this week, the IRS began enforcement of new rules governing which vehicles qualify for tax credits under the Inflation Reduction Act (IRA). The program provides an incentive of up to $7,500 for the purchase of a new battery-electric vehicle and plug-in hybrid EVs. The program requires a certain level of domestic content in those cars’ battery packs. As a result, many previously qualifying vehicles lost their eligibility, including models made by Rivian Automotive Inc (NASDAQ:RIVN) and Volkswagen (ETR:VOWG_p).
When the rules went into effect on April 18, 10 models qualified for the full $7,500 tax credit, and another seven were eligible for a $3,750 credit. The Volkswagen ID.4 was a notable omission from the list, which was puzzling at the time given that VW now builds its electric crossover in Chattanooga, Tennessee. However, ID.4 now appears on the U.S. Environmental Protection Agency’s official list of eligible vehicles.
“This is great news for consumers in the U.S. because it expands the choice of truly affordable EVs,” said Pablo Di Si, president and CEO of Volkswagen Group of America. “The ID.4 is already one of the lowest-priced electric SUVs on the market, and the $7,500 Federal Tax Credit makes it even more attainable. This shows that we made the right decision to localize production of the ID.4 in Tennessee and invest even further in battery production, components and innovation. Every ID.4 sold supports thousands of American jobs and helps advance our goal of a carbon-neutral future.”
Taking the tax credit into account, the price of the cheapest ID.4 is now down to $31,495.
Rivian also reappeared on the list, and both the R1T pickup truck and R1S SUV qualify for half of the tax credit as long as you pick a version that costs less than the $80,000 price cap.
The dual-motor R1T pickup starts at $73,000 for the standard battery pack, and even with the 350-mile large battery pack, the truck’s MSRP stays below the price cap.
Those wanting a Rivian SUV instead of a pickup have one choice, the dual-motor R1S with the standard battery pack, which starts at $78,000.
Shares of RIVN are down 4.56% in afternoon trading on Thursday.
