The US Treasury Department is offering thousand of dollars in EV tax incentives – meant to be used directly at the dealership – all to boost electric car sales across the country.
Starting January 1st, the IRS will allow US consumers to use a $7,500 electric vehicle (EV) tax credit as a point-of-sale rebate on a new EV, according to the new Treasury guidelines released Friday.
This means buyers who purchase a certified clean vehicle from a participating dealership can use the $7500 credit to offset the actual price of the EV being sold, just as a consumer would make a down payment. A $4,000 credit is also being offered for those wishing to purchase a used EV.
The two IRS tax credits – $7,500 for a new EV and $4,000 for a used one – currently can only be used as an income reduction on the buyer’s tax return for the year the EV was purchased.
"Researchers have found that consumers overwhelmingly prefer an immediate rebate at point-of-sale," the Biden administration said.
The average price for an electric car was over $53,000 by mid-summer 2023, roughly $23, 000 higher than the average standard gas-powered vehicle, according to automotive research company Kelley Blue Book.
To qualify for the point-of-sale rebate, consumers will have to meet certain income limits – $300,000 adjusted gross income for married couples, and $150,000 for single filers.
If consumers wind up exceeding the limits, they will be forced to repay the clean credit come tax time.
Direct to car dealers
The IRS says the program will not only lower costs for consumers but help car dealers grow their businesses.
Dealers wishing to participate in the program, must register with the IRS through a new website, IRS Energy Credits Online, made specifically for the new initiative.
Starting in January, dealers will be able to submit EV sales receipts to the IRS. The agency said it expects to reimburse dealers for the tax credits within 72 hours.
Under the new proposal, credit transfers will not affect a dealers’ tax liability, nor be part of a person taxable gross income.
The IRS will be releasing more details on the program in the coming months, including registration requirements, and how the dealerships will actually receive the rebate funds.
In August 2022, Congress approved a sweeping reform of the EV tax credits as part of the $430 billion Inflation Reduction Act (IRA).
The IRA rules states that only cars manufactured in North America can qualify for the clean vehicle credits, which at the time represented only 30% of the market.
The new price caps on qualifying EVs, and buyers income limits took place this past January.
New rules for EV battery makers
Meanwhile, in April, the IRS set also new rules addressing how manufacturers source battery components and critical minerals to qualify for the EV credits.
Clean vehicle credit restrictions concerning whether the EV batteries are being made with chemical components obtained from the US government's foreign entity ban list are expected to be worked out by the Biden administration before the initiative takes effect in 2024.
The "Foreign Entity of Concern" rule is reminiscent of recent laws enacted by the US Justice and Commerce Departments to restrict US companies from business dealings with certain nation-state adversaries involving certain sensitive technologies, chemicals, and industrial materials.
The US Environmental Protection Agency (EPA) forecasts by 2032, its proposed rules will increase the number of EV on the roads by 67%.
Of course, with more EVs on the road, cybersecurity threats will also evolve. For instance, studies have shown that EV battery chargers are now considered one of the leading attack vectors in the clean car sector.
Risks include the disruption of operations, theft of customer information, as well as the takeover of charger networks for use as bots in distributed denial-of-service (DDoS) attacks.
Research from the NYU Tandon School of Engineering has also suggested EV charging stations could pose a security risk to the national grid by causing instabilities.
Earlier this year, the Biden administration announced plans to build a network of 500,000 EV charging stations across the nation by 2030. At the time of the White House pledge, there were an estimated 130,000 public charging points and stations available across the country, close to 90,000 of them owned by Tesla Motors.
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