EVs Assembled Outside Of North America May Qualify For Tax Credits, Under Tweaked IRS Rules

Foreign-made EVs could still qualify for tax incentives under specific circumstances.

In the United States, when the Inflation Reduction Act was officially signed into effect, many did cheer its positive effects on the U.S. electric car market. Suddenly, manufacturers like GM and Tesla once again qualified for the full $7,500 tax credit for new EV purchases. But, a new clause went into effect when the bill was signed into law – only North American-made EVs qualified for any tax incentives at all. Naturally, that’s upset a lot of automakers, especially Hyundai, Kia, and Genesis; all of its EVs are made in Korea and not eligible for tax incentives.

Except, maybe they are. There have been diplomatic talks between the US and allied countries (like Korea) to ease the restrictions on the Inflation Reduction Act, and possibly, they may have paid off. According to several sources, the U.S. Treasury Department has released documents stating that foreign-made EVs leased by businesses, not for resale, may qualify for the EV tax credit program. Some have insinuated that the kind of unspecific caveat can allow dealerships to offer lease specials on EVs, wrapping the $7,500 benefit in the lease underwriting.

It’s not all peaches and cream, though, Senator Joe Manchin has blasted that interpretation, calling it “dangerous” and basically violating the spirit of the law, which is to spur North American EV supply chain production.

As a whole, the Inflation Reduction Act won’t go into full effect until March 2023, pushed back from the original Jan 1, 2023 date.

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