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The new rules are complicated. Here’s how to make sense of them if you’re shopping for an electric vehicle.
The Department of Treasury published new rules last year that will determine which new electric vehicles, purchased for personal use, will qualify for a $7,500 tax credit. They went into effect on April 18, 2023, and last for the next decade or so.
These new tax credit rules are complicated. The list of cars that qualify for the new tax credit can change from year to year — and even month to month. Many buyers in the EV market might have a few questions, including: Should I buy that new car now, or should I wait? Which cars qualify for the current tax credit, and which ones will earn the new one?
This is Heatmap’s guide to the new tax credit, why it matters, and what to keep in mind as you go EV shopping.
If you’re an ordinary American buying a brand-new EV to run errands and pick up the kids, these new rules apply to you. They will determine which cars you can get a federally funded discount on.
If you’re not buying a new car for personal use — because you’re getting it for your business, say, or because you’re buying a used EV — these new rules don’t apply to you. But you may qualify for other new subsidies. We get into those below.
And even if you are in that first category, you may discover it’s much cheaper to lease a new EV instead of buying it outright. We get into why below, too.
They completely change how the United States approaches the EV industry.
During the Bush and Obama administrations, the U.S. was focused mostly on getting automakers to begin to experiment with EVs. So it discounted the first 200,000 or so electric vehicles that each manufacturer sold by up to $7,500. If a company had cumulatively sold more than that number over time, as Tesla and General Motors eventually did, then the discount expired. By 2022, that had led to a peculiar situation where foreign automakers, such as Hyundai, could use the subsidy, while some of the largest American automakers couldn’t.
Now, U.S. policy is focused on two goals: (1) building up a domestic supply chain for EVs and (2) getting more EVs on the road. So the tax break is completely uncapped — any automaker can use it as many times as possible if they meet the criteria.
But many new requirements apply: Only cars that undergo final assembly in North America will qualify for any of the tax credit. Then, cars with a battery that was more than 50% made in North America will qualify for a $3,750 subsidy. And cars where at least 40% of the “critical minerals” used come from the U.S. or a country with whom we have a free-trade agreement will qualify for another $3,750 subsidy.
Those percentage-based requirements will ramp up over time. By 2029, for instance, 100% of a car’s battery and battery components must be made in North America.
Because Congress said so. The Inflation Reduction Act, which Democratic majorities in the House and Senate passed last year, mandated this change to the EV tax credit as part of its broad expansion of American climate policy.
Initially, fewer EVs will receive a subsidy under the new rules, Biden officials say. On a press call with reporters, a senior Treasury official argued that more cars will eventually qualify under the new rules than qualified under the old ones.
This year, at least 15 car or light trucks will receive some or all of the credit. Only some of those vehicles will qualify for the full $7,500 tax credit; some will qualify for a partial $3,750 tax credit. Here is the full list of qualifying models, along with the amount of the tax credit that they will earn:
• Audi Q5 TFSI e Quattro PHEV ($3,750)
• Cadillac LYRIQ ($7,500)
• Chevrolet Bolt ($7,500)
• Chevrolet Bolt EUV ($7,500)
• Chrysler Pacifica PHEV ($7,500)
• Ford Escape Plug-in Hybrid ($3,750)
• Ford F-150 Lightning, Standard & Extended Range ($7,500)
• Jeep Wrangler PHEV 4xe ($3,750)
• Jeep Grand Cherokee PHEV 4xe ($3,750)
• Lincoln Corsair Grand Touring ($3,750)
• Rivian R1S, Dual Large & Quad Large ($3,750)
• Rivian R1T, Dual Large, Dual Max, & Quad Large ($3,750)
• Tesla Model X Long Range ($7,500)
• Tesla Model 3 Performance ($7,500)
• Tesla Model 3 Long Range AWD ($3,500)
• Tesla Model Y AWD, Rear-Wheel Drive, & Performance ($7,500)
• Volkswagen ID.4 AWD PRO, PRO, S, & Standard ($7,500)
Some vehicles that earned the full tax credit in 2023, such as the Ford Mustang Mach E, don’t qualify for any benefit as of January 2, 2024.
Yes. A few examples: The Hummer EV, which costs more than $110,000 a piece, won’t qualify for either the new or old tax credit — it’s too expensive. And the Polestar 2 won’t qualify because it’s assembled in China.
Yes. Starting this year, the U.S. is preventing cars that receive too much manufacturing input from a “foreign entity of concern” — that is, China — from qualifying for any of the tax credit. This has reduced the number of vehicles that qualify for the $7,500 bonus.
This year, the government will also allow buyers to refund their EV tax credit at the dealership. That means buyers can now get up to a $7,500 discount at the moment when they buy their car instead of waiting until they file their taxes in the following year.
Yes. A married couple must have an adjusted gross income of less than $300,000 a year, and a single filer must have an AGI of less than $150,000 a year, to qualify for any aspect of the subsidy. A head-of-household must have an income of less than $225,000 a year.
Yes. Under the proposed rule, cars must have an MSRP below $55,000 to qualify for the credit. Vans, pickup trucks, and SUVs must have an MSRP below $80,000.
Yes. The Inflation Reduction Act also included a new $7,500 tax credit for EVs used for any commercial purpose. The Treasury Department is expected to interpret that provision to cover leasing, but it hasn’t announced the guidelines for that rule yet, so we don’t know for sure.
But the provision will probably tilt new EV drivers toward leasing their car rather than buying it outright, because the dealer should — emphasis on should — offer relative discounts on leasing vehicles as compared to buying them.
Yes. There’s also a new $4,000 tax credit for buying a used EV that costs $25,000 or less. It went into effect on January 1, 2023, so you can go ahead and use it today.
But note that it has even stricter income limits: Married couples can only take advantage of it if they make $150,000 or less, and other filers if they make $75,000 or less.
Here’s the list of cars that qualified for the $7,500 tax credit before April 18, 2023, according to the Department of Energy.
• Audi Q5 TFSI e Quattro (PHEV)
• BMW 330e *
• BMW X5 xDrive45e**
• Cadillac Lyriq
• Chevrolet Bolt
• Chevrolet Bolt EUV
• Chevrolet Silverado EV
• Chrysler Pacifica PHEV
• Ford E-Transit
• Ford Escape Plug-In Hybrid *
• Ford F-150 Lightning
• Ford Mustang Mach-E
• Genesis Electrified GV70
• Jeep Grand Cherokee 4xe
• Jeep Wrangler 4xe
• Lincoln Aviator Grand Touring *
• Lincoln Corsair Grand Touring *
• Nissan Leaf
• Nissan Leaf (S, SL, SV, and Plus models)
• Rivian R1S
• Rivian R1T
• Tesla Model 3 Long Range
• Tesla Model 3 Performance
• Tesla Model 3 RWD
• Tesla Model Y All-Wheel Drive
• Tesla Model Y Long Range
• Tesla Model Y Performance
• Volkswagen ID.4
• Volkswagen ID.4 AWD, Pro, and S models
• Volvo S60 PHEV *
• Volvo S60 Extended Range
• Volvo S60 T8 Recharge (Extended Range)
* These cars don’t qualify for the full $7,500 subsidy, although they all receive at least a $5,400 tax credit.
** Only some BMW X5 xDrive45e vehicles qualify — it depends where the car was made. Check the VIN or ask the dealership to confirm it was made in North America before buying.
This story was originally published on March 31, 2023. It was last updated on March 5, 2024, at 10:00 a.m. ET.
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Generate Capital’s Jonah Goldman makes his case.
The Inflation Reduction Act sparked a predictable surge in clean energy-related investments from the law’s signing in 2022 through the 2024 election, before President Trump’s second term ushered in an era of cancellations, closures, and downsizing. Of the domestic projects announced since the IRA’s passage, a total of 35 have been nixed or scaled back so far this year — more than in all of 2023 and 2024 combined, according to estimates from the environmental advocacy organization E2. This accounts for over $22 billion in lost investment and 16,500 in lost jobs.
“There’s a drastic decrease in the amount of new [clean energy] investments,” E2’s Michael Timberlake told me. After the IRA’s passage, he explained, nearly every month saw over a billion dollars invested in new clean energy projects. But since December of last year, monthly investment has come in below a billion dollars more often than not.
Domestic electric vehicle and battery manufacturing projects have been hit the hardest, as these sectors are staring down a federal bureaucracy clearly hostile to their tech on the one hand and Chinese competitors that are already leagues ahead of them on the other. But there is a bright spot: E2’s data shows that the grim outlook for clean energy projects is largely confined to the manufacturing sector. Many large-scale energy generation projects might actually, maybe, be mostly okay.
That’s what Jonah Goldman of the infrastructure investment firm Generate Capital is banking on. As electricity demand rises for the first time in over a decade, the need to deploy cost-competitive grid energy is only increasing. Thus, Goldman sees plenty of reason to continue investing in a renewables buildout — solar especially, which can often be deployed more quickly, flexibly, and economically than any other form of generation, politics aside.
“What is not a question really anymore is whether these projects are going to get built,” Goldman told me. “There’s just not another option. Even if you think of doubling our investment in gas generation, you still don’t get to this incredible increase in power demand that we need in order to reach the projections that we’re getting.”
Taking a closer look at the post-IRA projects that have been either canceled or scaled back shows that solar is indeed the most resilient investment of the bunch. Since the IRA’s passage, about 12% of announced solar projects have been canceled or downsized, compared to 25% of wind projects, 19% of EV projects, and 34% of EV battery projects. Only three of the 35 projects hit this year were related to solar, and only one of those was for solar generation.
Despite the overall dour domestic investment outlook, Timberlake thus agrees with Goldman that solar in particular isn’t grinding to a halt anytime soon. The market signal for clean energy, Timberlake said, is “indisputable.” The buildout might happen more slowly than it otherwise would have, as the administration continues to unspool regulatory red tape for these projects, but it’ll happen.
And, of course, it will get more expensive. Because while Trump’s One Big Beautiful Bill maintains investment and production tax credits for most clean energy technologies through 2033, it cuts credits for solar and wind projects that either start construction after July 2026, or, if they haven’t started by then, are placed in service after 2027.
While Goldman hates what that will do to electricity prices, he doesn’t seem too worried about it hurting Generate’s ability to invest. For the moment, he told me, this timeline leaves the firm with a strong pipeline of opportunities not only in solar, but also in other categories like battery energy storage, geothermal, and sustainable fuels that have largely retained their IRA incentives. “You’re still talking about hundreds of billions of dollars of available investments that don’t wear that risk at all,” he said.
In fact, there are also already so many renewables projects under construction or set to begin soon that “we’ve got more investable opportunities than we have capital to invest,” Goldman explained. Rather than a lull, the tax credit cutoff date is now creating an incentive for investors to throw their support behind projects that appear poised to meet the deadlines.
That won’t last forever. After the credits phase out, investment could certainly dip, Goldman said, “until either those incentives are restored — which they still could be — or the market figures out how to effectively price those projects without that incentive.” Because tax-credit eligible projects that began construction prior to July 2026 will still be coming online for the next few years, Goldman predicts the lull could start around 2029.
He’s not convinced the incentives are gone for good, though. Solar and wind tax credits have suffered through many periods of uncertainty during their decades-long history, always ultimately enduring. And while the industry shouldn’t bank on a mid-term congressional shakeup laying the groundwork for a credit extension, it’s always a possibility — especially given looming electricity price hikes. That could rile up voters enough to begin chipping away at the partisan divides that have formed around clean energy, fossil fuels, and how the heck to power all of these AI data centers.
“We’re no longer talking about a political issue, despite the fact that they made this a political issue.” Goldman told me. “What we need is more electrons on the grid for as affordable a price as possible. And some of those will be generated from gas, and some of those will be generated from renewables.”
The U.S. is also not the only place for infrastructure investors to make money. While domestic clean energy investment may be down, the first half of 2025 saw global private infrastructure funding increase significantly compared with the prior two years. Data center and renewables-focused funds drove the trend, making up 45% and 36% of total investment raised, respectively. The “power and transmission” sector — which includes fossil fuel-fired generation — comprised a mere 12%.
But given that climate funds from all corners of the globe do primarily invest in the U.S., this certainly points to a sustained interest in building domestic clean energy infrastructure. Or, as Goldman put it, “the fundamentals of the market are complicated but only pointing in one direction — a deep thirst for quick, buildable power. And there’s only certain technologies that can fill that deep thirst.”
On Interior’s birdwatching, China’s lithium slowdown, and recycling aluminum
Current conditions: Hurricane Erin is gathering strength as it makes its way toward Puerto Rico later this week • Flash flooding and severe storms threaten the Great Plains and Midwest • In France, 12 administrative regions are on red alert for heat as temperatures surge past 95 degrees Fahrenheit.
Ford announced plans on Monday to deliver a $30,000 mid-size all-electric truck in 2027, in a potential shakeup of an EV market that’s been plagued by high costs. But the truck — which is rumored to revive the retro name Ford Ranchero — wasn’t really the main news. The pickup is part of Ford’s plan to “reimagine the entire way it builds EVs to cut costs, turn around its struggling EV division, and truly compete with the likes of Tesla,” Heatmap contributor Andrew Moseman wrote, which the company has dubbed its second “Model T moment.”
The strategy embraces a more minimalist, software-driven method of car design that EV-only companies such as Tesla and Rivian employ, allowing them to make mechanically simpler vehicles with fewer buttons and parts and more functions run by software through touchscreens. The push could “change everything” and “disrupt the U.S. auto industry,” wrote Inside EVs.
The Department of the Interior’s Fish and Wildlife Service is sending letters to wind developers across the U.S. asking for volumes of records about eagle deaths, indicating an imminent crackdown on wind farms under the auspices of bird protection laws, Heatmap’s Jael Holzman reported. The letters demand developers submit a laundry list of documents to the Service within 30 days, including “information collected on each dead or injured eagle discovered.”
The Trump administration has ramped up its assault on the wind industry in recent weeks, de-designating millions of acres of ocean for offshore wind development and yanking federal approvals for the Lava Ridge wind project in Idaho. Here’s Jael with more on the escalation.
An explosion at a U.S. Steel plant outside Pittsburgh killed at least two workers and injured nearly a dozen more. The first worker confirmed to have died was Timothy Quinn, 39, a father of three and caretaker to his mother, his sister, Trisha Quinn told CNN. She said officials did not alert her to her brother’s death until 4 p.m., hours after the explosion occurred. “My dad worked at the steel mill for 42 years,” she said. “He would be disgusted at the situation right now.” U.S. Steel executives said they do not yet know what caused the blast. The name of the second worker to have died was not yet confirmed.
The Clairton Coke Works facility, which has operated for more than 120 years, is a key node in the American steel supply chain, providing iron for the blast furnaces in Braddock, Pennsylvania, and Gary, Indiana. It was slated for potential investments under Nippon Steel’s $15 billion acquisition of the American giant. The extent of the damage is unclear, but the reconstruction of the plant could pose a test of whether Nippon will invest in newer, cleaner technologies or rebuild the existing coal-fired equipment.
Chinese battery giant Contemporary Amperex Technology, or CATL, said Monday it would halt production at a major lithium mine, sparking a surge in lithium futures and miners’ share prices, Reuters reported. The move is seen as part of Beijing’s broader attempt to rein in China’s overcapacity in the battery market, which created a global glut. Stock in lithium companies outside China surged on the news, as did spot prices. The license on the mine, located in the southeast province of Jiangxi, expired on August 9. The site previously supplied up to 6% of the world’s lithium.
“I am bullish on the move. It is proof positive that Chinese producers can only operate at a loss for so long before shutting in production. When they do, the floor under prices starts to take shape,” Ashley Zumwalt-Forbes, the Department of Energy’s former deputy director for batteries and critical minerals, wrote on LinkedIn. “This move will not fix the sector’s structural challenges overnight, but it is a meaningful signal that the worst of the oversupply pressure may be behind us.”
President Donald Trump’s 50% tariffs on imported aluminum could spur a recycling boom, industry experts told The Wall Street Journal’s Ryan Dezember. Primary aluminum production dwindled over the last 25 years. Two of the first new smelters planned in the U.S. in decades are facing increased competition for electricity from data centers. Production is likely still a few years away. By contrast, aluminum-recycling plants can be built faster and cheaper — roughly two years and $150 million — and consume 5% of the energy needed for primary production since they rely on chemical reactions to break down wasted metal. “Recycling is the answer,” said Duncan Pitchford, the executive in charge of recycling giant Norsk Hydro’s upstream business in the U.S. “The metal is already here.”
Scientists at the University of Illinois Urbana-Champaign and Princeton University re-engineered the metabolism of the yeast Issatchenkia orientalis to supercharge its fermentation of plant glucose into succinic acid, an important industrial chemical used in food additives and agricultural and pharmaceutical products. The natural fermentation process, relying on yeasts and renewable plant material, is far less carbon intensive than the conventional production using petrochemicals. “These advances bring us closer to greener manufacturing processes that benefit both the environment and the economy,” Vinh Tran, study’s primary author, said in a press release.
The assembly line is the company’s signature innovation. Now it’s trying to one-up itself with the Universal EV Production System.
In 2027, Ford says, it will deliver a $30,000 mid-size all-electric truck. That alone would be a breakthrough in a segment where EVs have struggled against high costs and lagging interest from buyers.
But the company’s big announcement on Monday isn’t (just) about the truck. The promised pickup is part of Ford’s big plan that it has pegged as a “Model T moment” for electric vehicles. The Detroit giant says it is about to reimagine the entire way it builds EVs to cut costs, turn around its struggling EV division, and truly compete with the likes of Tesla.
What lies beneath the new affordable truck — which will revive the retro name Ford Ranchero, if rumors are true — is a new setup called the Ford Universal EV Platform. When car companies talk about a platform, they mean the automotive guts that can be shared between various models, a strategy that cuts costs compared to building everything from scratch for each vehicle. Tesla’s Model 3 and Model Y ride on the same platform, the latter being essentially a taller version of the former. Ford’s rival, General Motors, created the Ultium platform that has allowed it to build better and more affordable EVs like the Chevy Equinox and the upcoming revival of the Bolt. In Ford’s case, it says a truck, a van, a three-row SUV, and a small crossover can share the modular platform.
At the heart of the company’s plan, however, is a new manufacturing approach. The innovation of the original Model T was about the factory, after all — using the assembly line to cut production costs and lower the price of the car. For this “Model T moment,” the company has proposed a sea change in the way it builds EVs called the Ford Universal EV Production System. It will demonstrate the strategy with a $2 billion upgrade to the Ford factory in Louisville, Kentucky, that will build the new pickup.
In brief, Ford has embraced the more minimalist, software-driven version of car design embraced by EV-only companies like Tesla and Rivian. The vehicles themselves are mechanically simpler, with fewer buttons and parts, and more functions are controlled by software through touchscreen interfaces. Building cars this way cuts costs because you need far fewer bits, bobs, fasteners, and workstations in the factory. It also reduces the amount of wiring in the vehicle — by more than a kilometer of the stuff compared to the Mustang Mach-E, Ford’s current most popular EV, the company said.
Ford is in dire need of an electric turnaround. The company got into the EV race earlier than legacy car companies like Toyota and Subaru, which settled on more of a wait-and-see approach. Its Mustang Mach-E crossover has been one of the more successful non-Tesla EVs of the early 2020s; the F-150 Lightning proved that the full-size pickup truck that dominates American car sales could go electric, too.
But both vehicles were expensive to make, and the Lightning struggled to make a dent in the truck market, in part because the huge battery needed to power such a big vehicle gave it a bloated price. When Tesla started a price war in the EV market a few years ago, Ford began hemorrhaging billions from its electric division, struggling to adapt to the new world even as carmakers like GM and Hyundai/Kia found their footing.
The big Detroit brand has been looking for an answer ever since, and Monday’s announcement is the most promising proposal it has put forward. Part of the production scheme is for Ford to build its own line of next-gen lithium-ion phosphate, or LFP batteries in Michigan, using technology licensed from the Chinese giant CATL. Another step is to employ the “assembly tree,” which splits the traditional assembly line into three parallel operations, which Ford says reduces the number of required workstations and cuts assembly time by 15%.
Affordability has always been a bugaboo for the American EV industry, a worry exacerbated by the upcoming demise of the $7,500 tax credit. And while Ford’s manufacturing overhaul will go a long way toward building a light-duty pickup EV that sells for $30,000, so too will a fundamental change in thinking about batteries, weight, and range. The F-150 Lightning isn’t the only pickup with a big battery and an even bigger price. That truck’s power pack comes in at 98 kilowatt-hours; large EV pickups like the Rivian R1T and Chevy Silverado EV have 150 or even 200 kilowatt-hour batteries, necessary to store enough power to give these heavy beasts a decent driving range.
InsideEVs reports, however, that the affordable Ford truck may have a battery capacity of just over 50 kilowatt-hours, which would dramatically reduce its cost to make. The trade-off, then, is range. The Slate small pickup truck that made waves this year for its promised price in the $20,000s would have just 150 miles of range in its cheapest form. Ford hasn’t released any specs for its small EV truck, but even using state-of-the-art LFP chemistry, such a small battery surely won’t deliver many more miles per charge.
Whatever the final product looks like, the new Ford truck and the infrastructure behind it are another reminder that, no matter the headwinds caused by the Trump administration, EVs are the future. Ford had been humming along through its EV struggles because its gas-burning cars remained so popular in America, and so profitable. But those profits collapsed in the first half of 2025, according to The New York Times. Meanwhile, Ford and every other carmaker are struggling to catch up to the Chinese companies selling a plethora of cheap EVs all over the world. Their very future depends on innovating ways to build EVs for less.