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Your EV options just got a lot smaller — for now, anyway.
Once upon a time, if you wanted to buy an electrified vehicle, you could qualify for a tax credit of up to $7,500 — provided that particular car manufacturer hadn’t yet exceeded the number of eligible vehicles it could sell with that incentive attached.
Sounds a bit complex, right? Today, EV buyers are probably wishing things were that simple.
The finalized EV and plug-in hybrid tax incentive rules go into effect this week. And while they do manage to modernize and refine the old program — including getting rid of the old limit on how many cars were eligible — they also significantly cut down on the number of EVs and PHEVs available for a tax break at this time.
The new rules have been in the works since late last year, but it wasn’t until this week that stipulations around battery sourcing and so-called “critical minerals” took effect as well. As The Verge pointed out Monday, only six vehicles currently on the market (that qualifier is important) are eligible for the full $7,500 tax credit. Others will only be allowed half of that. Many others, including whole brands of automakers, will be left out in the cold entirely.
In short, today’s news is great for General Motors, Ford, or Tesla. It’s tough luck for just about every other car company operating in the EV and PHEV space, like Nissan, Rivian, BMW, or Volkswagen.
The new rules, effective April 18, 2023, stipulate that an EV or PHEV (non-plug-in hybrids sadly don’t qualify at all) only gets tax incentives if its final assembly is in North America; its battery is more than 50% made in North America; and at least 40% of the battery’s “critical minerals” come from the U.S. or one of its free-trade partners. There are essentially two credits involved and each is worth $3,750: one for the car itself and one for the battery. You can see a full list at the EPA’s FuelEconomy.gov website.
The major silver lining in this situation is that customers can still qualify for a full $7,500 tax credit if they lease an EV or PHEV, as long as their dealership decides to pass on the savings.
Let’s break this down.
Come at the king, you best not miss. The worldwide leader in EV production fares very well under the new rules. Granted, the Model S and Model X are too expensive to qualify for any tax breaks, but we knew that going in.
Instead, Tesla’s mainstream, volume-selling cars — the Model 3 and Model Y — keep their full $7,500 tax credits. The only one with batteries that don’t meet the new mineral-sourcing requirement is the Model 3 Standard Range Rear-Wheel-Drive; in other words, the base Model 3.
But between the tax incentives, Elon Musk’s tendency to slash prices on a whim, and the company’s still-unmatched ability to deliver EVs at scale, the rules should keep Tesla’s lead over other automakers pretty comfortable for some time.
Tesla still made up 64 percent of the U.S. EV market last year, and nearly half of its registrations were for the Model Y crossover. In other words, as The Washington Post’s Shannon Osaka pointed out today, the new tax credits are more limited but they do incentivize the cars that make up most of the market.
GM is quick to say that “qualifying customers will have access to the full $7,500 credit across [its] entire EV fleet,” but it’s key to remember that most of the cars on its list are currently not for sale. And others are having a hard time getting there.
For example, the Chevrolet Bolt and Bolt EUV still qualify for the full credits. These two EVs, which have a range of about 250 miles, are both screaming deals — even more so with the full credits. But they’re getting a bit old and do not offer the same fast-charging options that many newer competitors do. It’s not a dealbreaker weakness for the Bolt, but it is arguably the car’s biggest drawback.
The Cadillac Lyriq luxury crossover also qualifies for the full break. But GM has struggled with production for that vehicle. The Lyriq went on sale last year, but GM only made about 8,000 of them in all of 2022, much to the chagrin of reservation-holders and Cadillac’s dealers. To date, they’re seldom seen on roads outside of Detroit. (The GMC Hummer EV is too expensive to qualify for tax credits under the new rules, but it’s also had a lot of production problems to date.)
The rest of the cars on GM’s list — the Chevrolet Equinox EV, Blazer EV and Silverado EV — also aren’t even on sale yet. And given GM’s known troubles ramping up EV output, it’s fair to ask when prospective EV buyers will really be able to take advantage of the new rules here.
Ford’s eligible offerings include the electric Mustang Mach-E, F-150 Lightning, and E-Transit van, as well as the plug-in hybrid Escape. Those cars’ fancier cousins, the Lincoln Aviator and Corsair, also qualify for the hybrid tax credit, which is rated at $3,750.
The survival of the credit is great news for buyers of the F-150 Lightning, which is already America’s best-selling electric truck (and the only one to achieve anything close to real mass production.) Unfortunately, the popular Mustang Mach-E only qualifies for half the credit it used to because its batteries don’t meet the sourcing requirements.
Eventually, Ford will be more than likely able to equip the electric Mustang with compliant batteries. It’s been on the market for a few years now, and so the way it’s designed and built pre-dates these new rules. But it’s still a bit of a bummer for anyone aiming to buy this fast electric crossover.
When the EPA’s list was first unveiled, the biggest loser seemed to be Volkswagen. The German automaker has ambitious all-electric plans and mass-adoption hopes for its ID.4 electric crossover, yet none of its cars initially made the cut. At the time a VW spokesperson said the company was “fairly optimistic" that the ID.4 would qualify for the tax credit once VW received documentation from a supplier. That optimism was not misplaced. On Wednesday, the ID.4 was added to the EPA’s list and made eligible for the full $7,500 tax credit.
Other European automakers who build PHEVs and EVs in North America now find themselves out in the cold, since their batteries may not meet the mineral-sourcing requirements at all anymore.
The cars losing their tax credits entirely include the Audi Q5 TFSI e hybrid; the BMW 330e, and X5 xDrive45e hybrids; and the Volvo S60 hybrids. Being locally built isn’t enough anymore under the new rules, and that certainly represents a setback for these automakers.
At least for now. BMW is planning a $1.2 billion battery factory in South Carolina.
This ambitious electric truck startup also loses its tax incentive qualifications entirely under the new rules. Rivian’s R1T truck and R1S SUV are both built in America, but its Samsung SDI-sourced batteries are not. Last year, the two companies abandoned plans to build a U.S. battery factory together after being unable to come to terms on the deal.
Nissan got hit especially hard on this one. The U.S.-built Leaf won’t meet the battery requirements for the new rules, and the Japan-built Ariya crossover — the star of a big marketing push featuring actor Brie Larson – also won’t be eligible. That’s a tough blow for a brand that’s trying to regain the early lead it once had in the EV space.
At the same time, Nissan is another company with a huge North American factory presence and it will expand that to meet the new tax credit demands. Nissan has said it hopes to sell six EVs in America by 2026, many of them built in Mississippi.
The rules going into effect this week don’t change anything for South Korea’s Hyundai Motor Group. It’s been known for a while that its Korean-built EVs wouldn’t qualify for any tax incentives, and now that’s official. That means critically acclaimed cars like the Hyundai Ioniq 5 and Kia EV6 lose a big advantage over some competitors.
Even Genesis, which now produces an all-electric version of its Genesis GV70 crossover in Alabama, loses out this time. It’s not clear why the Electfied GV70 doesn’t qualify; we will update this story as we learn more.
But the new EV tax credit rules are a big blow for Hyundai, which is undertaking a major EV push to challenge Tesla on the world stage and thought it had worked out a deal with President Biden. Long-term, the answer will be considerably more American EV production, but that will take time. For now, Hyundai is banking on people getting a deal by leasing these EVs instead.
The long-term goal of the new rules is to have a robust EV battery manufacturing infrastructure right here in North America so that our zero-emission future doesn’t depend so much on China. New factories are springing up left and right in the U.S. as automakers and suppliers alike pour billions into future battery power.
But those won’t go online overnight; very much the opposite. Ford’s own $3.5 billion battery plant won’t be up and running until 2026. In the immediate term, these rules so limit eligibility that they could hinder wider EV and PHEV adoption at a crucial time.
All of it begs the question: What is the bigger goal of the IRA’s car-related rules: To get emissions down and spur EV adoption as quickly as possible, or to ramp up a domestic battery manufacturing ecosystem?
If it’s the former, then these new tax credit rules are a bit of a whiff. They’re so limiting they run the risk of keeping people out of electrified vehicles for cost reasons. The average price of an EV is about $60,000 before any incentives, which is greater than the also-high $45,000 average price for most internal combustion new cars.
Cost could slow down EV acceptance right when the public charging infrastructure is finally getting a much-needed shot in the arm of its own.
To be clear, the EVs are coming. Just about every automaker on this list has announced aggressive expansion plans for locally made EVs, batteries, or both. Most automakers are global entities and have to keep an eye on the long game, which seems to be battery-centric thanks to regulations in Europe and China.
Still, this a very tough, specific set of rules to meet — and it means EV growth might just accelerate a little less quickly than it could have.
This article was updated on April 19 at 1:31pm ET after the Volkswagen ID.4 was included on the EPA’s list.
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On executive orders, the Supreme Court, and a “particularly dangerous situation” in Los Angeles.
Current conditions:Nearly 10 million people are under alert today for fire weather conditions in southern California • The coastal waters off China hit their highest average temperature, 70.7 degrees Fahrenheit, since record-keeping began • A blast of cold air will bring freezing temperatures to an estimated 80% of Americans in the next week.
High winds returned to Los Angeles on Monday night and will peak on Tuesday, the “most dangerous” day of the week for the city still battling severe and deadly fires. In anticipation of the dry Santa Ana winds, the National Weather Service issued its highest fire weather warning, citing a “particularly dangerous situation” in Los Angeles and Ventura Counties for the first time since December 2020.
A new brush fire, the Auto Fire, ignited in Oxnard, Ventura County, on Monday evening. It spread 55 acres before firefighters stopped it. Meanwhile, investigators continue to look for the cause of the Palisades Fire, which ignited near a week-old burn scar, a popular partying spot, and damaged wooden utility poles, according to a New York Times analysis.
National Weather Service
Trump is planning an executive order banning offshore wind developments on the East Coast, Heatmap’s Jael Holzman reported Monday. The news came from New Jersey Republican Representative Jeff Van Drew, who said he’s working with Trump’s team to “to prevent this offshore wind catastrophe from wreaking havoc on the hardworking people who call our coastal towns home.”
Van Drew’s press release also said that this order is “just the beginning,” and that it would be finalized “within the first few months of the administration,” a far cry from the Day One action Trump has promised. Van Drew had earlier told New Jersey reporters that the ban would last six months.
Meanwhile, in other executive order news, Biden issued an order on Tuesday directing the Energy and Defense departments to lease federal lands for “gigawatt-scale” data centers, according to E&E News, but only if they bring online enough clean energy to match their facilities’ needs.
On Monday, the Supreme Court refused to hear a lawsuit brought by Utah attempting to seize control of the “unappropriated” federal lands in the state. Opponents argued that the lawsuit, if successful, would have put public lands across the West on the path to privatization since Utah and other states likely couldn’t afford to manage them and would have had to sell off much of them. However, “while the Court’s decision denying original review of Utah’s claims is welcome news for our shared public lands, we fully expect Utah’s misguided attacks to continue,” Alison Flint, the senior legal director at The Wilderness Society, said in a statement.
As I reported last month, the Utah lawsuit organizers “seem prepared to make an appeal to Congress or the Trump administration if the Supreme Court doesn’t make a move in their favor,” given that “funding for the messaging for Stand for Our Land, the publicity arm of the lawsuit, has reportedly outpaced the spending on lawyers.
Also on Monday, the Supreme Court declined to hear a fossil fuel industry argument to block states, municipalities, and other groups from seeking damages for the harms caused by climate change. The appeal by Sunoco, Exxon Mobil, Chevron, and others stemmed from a high-profile lawsuit in Honolulu that seeks to hold energy companies accountable for causing “a substantial portion” of the effects of climate change. Had the Supreme Court taken up the case, similar lawsuits by California and others likely would have been paused during deliberations. The American Enterprise Institute, a conservative think tank, responded to Monday’s decision by claiming activists will now “make themselves the nation’s energy regulators.”
A little over a week after the start of New York City’s congestion pricing, the Metropolitan Transportation Authority released data showing significant decreases in the amount of time passengers spend in inbound traffic. On average, during the morning commute, traffic times have decreased by 30% to 40%; in some cases, such as during rush hour in the Holland Tunnel, travel time has been cut in half, going from over 11 minutes to under five. Due to the traffic reductions, some bus routes are up to 28% faster now than at the same time last year. “It has been a very good week here in New York,” MTA deputy chief Juliette Michaelson said in a news conference.
So far, the MTA has seen an average of 43,000 fewer drivers entering the congestion pricing zone, which begins below 60th St. and costs $9 during the day. While Gothamist notes that this is only a 7.3% reduction compared to last January, many New Yorkers say congestion pricing effects are visibly noticeable in the streets of lower Manhattan.
The Brooklyn Bridge as congestion pricing went into effect. Photo by Michael M. Santiago/Getty Images
Oil and gas magnate Harold Hamm is throwing a “swanky party” to celebrate the inauguration of Donald Trump, on whose campaign he spent more than $4.3 million, according to the research group Fieldnotes and The New York Times. Interior Secretary nominee Doug Burgum was among the invitees, although an advisor has said he does not plan to attend; one of the party’s several major oil and gas industry sponsors, Liberty Energy, was founded by Chris Wright, Trump’s nominee for Energy Secretary.
In May, Trump met with oil and gas executives at his Mar-a-Lago resort and promised industry-friendly tax and regulatory policies and an aggressive stance against wind energy if they helped fund his White House bid. The oil and gas industry ultimately invested some $75 million in efforts to help re-elect the former president and contributed millions to his legal defense.
25% — That’s the level of tariff Alberta Premier Danielle Smith said Canada should prepare for after a meeting with incoming President Trump — and not expect exceptions for its crude oil exports to the U.S., per Bloomberg’s Javier Blas.
Though it might not be as comprehensive or as permanent as renewables advocates have feared, it’s also “just the beginning,” the congressman said.
President-elect Donald Trump’s team is drafting an executive order to “halt offshore wind turbine activities” along the East Coast, working with the office of Republican Rep. Jeff Van Drew of New Jersey, the congressman said in a press release from his office Monday afternoon.
“This executive order is just the beginning,” Van Drew said in a statement. “We will fight tooth and nail to prevent this offshore wind catastrophe from wreaking havoc on the hardworking people who call our coastal towns home.”
The announcement indicates that some in the anti-wind space are leaving open the possibility that Trump’s much-hyped offshore wind ban may be less sweeping than initially suggested.
In its press release, Van Drew’s office said the executive order would “lay the groundwork for permanent measures against the projects,” leaving the door open to only a temporary pause on permitting new projects. The congressman had recently told New Jersey reporters that he anticipates only a six-month moratorium on offshore wind.
The release also stated that the “proposed order” is “expected to be finalized within the first few months of the administration,” which is a far cry from Trump’s promise to stop projects on Day 1. If enacted, a pause would essentially halt all U.S. offshore wind development because the sought-after stretches of national coastline are entirely within federal waters.
Whether this is just caution from Van Drew’s people or a true moderation of Trump’s ambition we’ll soon find out. Inauguration Day is in less than a week.
Imagine for a moment that you’re an aerial firefighter pilot. You have one of the most dangerous jobs in the country, and now you’ve been called in to fight the devastating fires burning in Los Angeles County’s famously tricky, hilly terrain. You’re working long hours — not as long as your colleagues on the ground due to flight time limitations, but the maximum scheduling allows — not to mention the added external pressures you’re also facing. Even the incoming president recently wondered aloud why the fires aren’t under control yet and insinuated that it’s your and your colleagues’ fault.
You’re on a sortie, getting ready for a particularly white-knuckle drop at a low altitude in poor visibility conditions when an object catches your eye outside the cockpit window: an authorized drone dangerously close to your wing.
Aerial firefighters don’t have to imagine this terrifying scenario; they’ve lived it. Last week, a drone punched a hole in the wing of a Québécois “Super Scooper” plane that had traveled down from Canada to fight the fires, grounding Palisades firefighting operations for an agonizing half-hour. Thirty minutes might not seem like much, but it is precious time lost when the Santa Ana winds have already curtailed aerial operations.
“I am shocked by what happened in Los Angeles with the drone,” Anna Lau, a forestry communication coordinator with the Montana Department of Natural Resources and Conservation, told me. The Montana DNRC has also had to contend with unauthorized drones grounding its firefighting planes. “We’re following what’s going on very closely, and it’s shocking to us,” Lau went on. Leaving the skies clear so that firefighters can get on with their work “just seems like a no-brainer, especially when people are actively trying to tackle the situation at hand and fighting to save homes, property, and lives.”
Courtesy of U.S. Forest Service
Although the Super Scooper collision was by far the most egregious case, according to authorities there have been at least 40 “incidents involving drones” in the airspace around L.A. since the fires started. (Notably, the Federal Aviation Administration has not granted any waivers for the air space around Palisades, meaning any drone images you see of the region, including on the news, were “probably shot illegally,” Intelligencer reports.) So far, law enforcement has arrested three people connected to drones flying near the L.A. fires, and the FBI is seeking information regarding the Super Scooper collision.
Such a problem is hardly isolated to these fires, though. The Forest Service reports that drones led to the suspension of or interfered with at least 172 fire responses between 2015 and 2020. Some people, including Mike Fraietta, an FAA-certified drone pilot and the founder of the drone-detection company Gargoyle Systems, believe the true number of interferences is much higher — closer to 400.
Law enforcement likes to say that unauthorized drone use falls into three buckets — clueless, criminal, or careless — and Fraietta was inclined to believe that it’s mostly the former in L.A. Hobbyists and other casual drone operators “don’t know the regulations or that this is a danger,” he said. “There’s a lot of ignorance.” To raise awareness, he suggested law enforcement and the media highlight the steep penalties for flying drones in wildfire no-fly zones, which is punishable by up to 12 months in prison or a fine of $75,000.
“What we’re seeing, particularly in California, is TikTok and Instagram influencers trying to get a shot and get likes,” Fraietta conjectured. In the case of the drone that hit the Super Scooper, it “might have been a case of citizen journalism, like, Well, I have the ability to get this shot and share what’s going on.”
Emergency management teams are waking up, too. Many technologies are on the horizon for drone detection, identification, and deflection, including Wi-Fi jamming, which was used to ground climate activists’ drones at Heathrow Airport in 2019. Jamming is less practical in an emergency situation like the one in L.A., though, where lives could be at stake if people can’t communicate.
Still, the fact of the matter is that firefighters waste precious time dealing with drones when there are far more pressing issues that need their attention. Lau, in Montana, described how even just a 12-minute interruption to firefighting efforts can put a community at risk. “The biggest public awareness message we put out is, ‘If you fly, we can’t,’” she said.
Fraietta, though, noted that drone technology could be used positively in the future, including on wildfire detection and monitoring, prescribed burns, and communicating with firefighters or victims on the ground.
“We don’t want to see this turn into the FAA saying, ‘Hey everyone, no more drones in the United States because of this incident,’” Fraietta said. “You don’t shut down I-95 because a few people are running drugs up and down it, right? Drones are going to be super beneficial to the country long term.”
But critically, in the case of a wildfire, such tools belong in the right hands — not the hands of your neighbor who got a DJI Mini 3 for Christmas. “Their one shot isn’t worth it,” Lau said.
Editor’s note: This story has been updated to reflect that the Québécois firefighting planes are called Super Scoopers, not super soakers.