A year ago, nearly every new electric vehicle and plug-in hybrid on the market qualified for a tax credit of up to $7,500, provided it was manufactured in North America. But the rules are changing in a major way now that 2024 has arrived. The new year brings big restrictions on which EVs and hybrids get the tax break as the U.S. looks to crack down on battery components sourced from China.

In other words, if you were banking on a tax credit to help get you into a new electric vehicle or plug-in hybrid for 2024, your list of choices just got a whole lot smaller. 

Today, the IRS released the full, official list of EVs and PHEVs that qualify for the tax credit and it may be more notable for what’s not on it than anything else. For example, none of General Motors’ new EVs like the Blazer and Cadillac Lyriq qualify. The Ford F-150 Lightning gets the tax break, but not the Ford Mustang Mach-E. As we previously reported, only the Tesla Model 3 Performance qualifies, but not other examples of the electric sedan. (It is unclear at this time why the Cybertruck and Model S do not qualify.) What used to be 43 models is now just 19. 

It’s not all doom and gloom, however. Tesla and Rivian are represented well here; the Tesla Model Y, ostensibly the best-selling car in the world, gets the tax credit for all three of its configurations. That’s great news for Tesla and will likely contribute to its continued market domination for at least a while longer. And a few hybrid stalwarts like the Chrysler Pacifica and Jeep Wrangler 4xe maintain their status as well. The Chevrolet Bolt EV and EUV also qualify here, even though supplies are dwindling as both models were discontinued in December. 

Here’s the full list from FuelEconomy.gov, where you can also check if a certain car qualifies from its VIN: 

Definitely not a huge list at present. So what gives here, exactly? That requires a bit of a history lesson.

The EV tax credit was revised and modernized as part of the Inflation Reduction Act, which passed in 2022. That legislation had a number of goals—including possibly conflicting ones—like encouraging local manufacturing and lessening China’s iron grip on the battery supply chain. (The tax credits also have limits based on a buyer’s annual income and the price of the vehicle in question to keep these from just being luxury gifts to wealthy drivers.) 

The new credits went into effect in January of last year. But over the subsequent months, the list of qualifying vehicles became narrower and narrower, prioritizing batteries and battery components made in North America as well. Now, the rules stipulate that starting in 2024—which, as you may recall, is today—any vehicle containing battery components from what the government calls a “foreign entity of concern” will be excluded from receiving tax credits. The so-called “FEOC” rules pretty much directly target China, and given that country’s utter dominance of the battery supply chain, a lot of new cars get left out. 

Still, there are a lot of caveats to note here. For one, the credits depend on automakers submitting documentation to ensure their cars qualify; U.S. Treasury Department officials said that while the deadline for that was Dec. 18, several car companies were still entering submissions at the end of the year. In other words, more cars could potentially be added to this list in the coming days and weeks. A Volkswagen spokesperson has told InsideEVs that the company is “optimistic” the ID.4 will qualify for tax credits eventually. Reuters also reports today that GM says the Lyriq and Blazer EV will regain eligibility in early 2024, and other models will soon too. 

On the plus side, it’s crucial to note that leasing will still get you the full tax credit regardless of where the car was made, a loophole that has greatly benefitted manufacturers like Kia and Hyundai. Additionally, the credits now apply at the point of sale, meaning you get an instant price cut on these cars without having to wait for tax season. 

Overall, this shorter list may be a disappointment to many buyers in 2024. But it’s worth keeping an eye on what gets added over the next few months. If 2023 taught us anything, it’s that the EV tax credits never stay static for very long. 

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