Consumer confusion over EV tax credits stymies buyers, sellers

No one is sure how long certain vehicles will qualify for $7,500.

Consumer confusion over new federal tax credits for electric vehicles probably will continue for a few more months as the Biden administration and automakers sort out the rules.

Dealers say the lack of clarity has made it hard for them to promote EVs to buyers because no one is sure how long certain vehicles will qualify for the $7,500 credit — undermining a perk that was designed to accelerate the White House’s green-energy agenda.

“Obviously, lowering the perceived price by $7,500 is critical,” said Brett Smith, an analyst at the Center for Automotive Research in Ann Arbor, Mich. “But consumers don’t have certainty, and neither do dealers . ... In the meantime, it may confuse and frustrate them, and they go off and buy a hybrid instead.”

The consumer tax credits, passed in the Inflation Reduction Act, are a centerpiece of the Biden administration’s green-energy push, which aims to boost high-tech employment, lower carbon emissions and reduce U.S. reliance on Chinese-made goods. Industry observers see them as an important part of making electric vehicles more affordable.

Many people at the recent Washington Auto Show expressed interest in EVs but hesitated over the prices that are still, on average, higher than for other cars.

Perusing some fully electric Hyundai models at the show, Ally Burleson-Gibson said she was leaning toward a hybrid. “Obviously, you’re putting out quite a bit more for some of the higher-end EVs ... the lower price point for some of the hybrids is a little more attractive at this point,” she said.

The government has published a list of about three dozen electric vehicles that currently qualify for the tax credit, but the list is expected to change — and possibly grow shorter — after the Treasury Department releases new rules on battery content by the end of March, industry executives say. Automakers expect they will need time to determine which batteries and vehicles meet those rules.