When the IRS released the rules of origin at the end of March, people thought many electric vehicles would not qualify for the full $7,500 tax credit. Still, a loophole in the Inflation Reduction Act (IRA) allows those who lease their EVs to benefit regardless of where the cars and their batteries are manufactured. Despite its disadvantages, this will make EV leasing a no-brainer in the US.
Starting April 18, new electric vehicles in the US may qualify for a tax credit only if their batteries are built with raw materials coming from a country with a free-trade agreement with the US. The conditions are pretty strict and tighten with every year going forward, restricting the choice of EVs that qualify for a tax credit. Under the new requirements, many EV models were excluded from the tax credit list. In the case of Tesla, the Model 3 RWD was affected because its LFP battery was built with components from China. The most affordable Tesla model still gets half the credit, or $3,750.
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