The Mercury News

Two Great EVs You Should Consider Buying Soon

- By Peter Douglas

If you are currently in the market for an electric vehicle, there is a good chance that the Ford Mustang Mach-E or the Chevy Bolt EUV are on your list of serious contenders. Both EV models are outstandin­g choices, and both are eligible for the full $7,500 federal tax credit, if you act quickly. Sometime in March, the Treasury Department will begin enforcing strict new rules on the sourcing of battery materials that are expected to reduce the value of the credit for the handful of EV models that remain eligible. Consumers have just a few weeks left to take full advantage of the valuable incentive, which has been available since 2009.

The unusual window of opportunit­y is due to the implementa­tion of the Inflation Reduction Act, which made substantia­l changes to the rules governing the popular tax credit. EVs manufactur­ed by General Motors and Tesla had become ineligible for the credit under the old rules, which included a sunset provision phasing out the value of the credit once a manufactur­er sold 200,000 qualified vehicles. Many provisions of the newly revised Clean Vehicle Credit went into effect on the first day of 2023, including a repeal of the 200,000-vehicle sales cap. Another rule change has disqualifi­ed all EVs assembled outside of North America, but this draconian restrictio­n does not apply to the Mach-E or the Bolt EUV. A small number of EV models remain eligible, but most of them will see the value of their credit drop to $3,750 or zero when the battery sourcing rules are implemente­d in March.

Another significan­t restrictio­n that went into effect on January 1st disqualifi­es EVs that exceed MSRP price caps. The suggested retail price of an electrifie­d sedan cannot exceed $55,000, and the limit is $80,000 for electrifie­d trucks, vans, and large SUVs. This new rule will deny the Clean Vehicle Credit to many luxury EVs manufactur­ed in North America but will not necessaril­y disqualify a Mach-E or a Bolt EUV, which will be subject to the $55,000 threshold. The value of the credit will be based on the eligibilit­y rules that are in effect when the taxpayer takes delivery of the vehicle, and it appears that Ford and General Motors have readily available models with qualified sticker prices.

Opportunis­tic consumers looking to pocket the full tax credit would normally be expected to evade the impending rule changes by purchasing an eligible EV quickly, but the rollout of the Clean Vehicle Credit has been plagued by its excessive complexity, and a sales surge in February may not materializ­e. The Treasury Department is responsibl­e for administer­ing the perplexing legislatio­n and has had trouble clarifying precise rules and procedures in a timely fashion. The numerous new restrictio­ns on the credit have prevented the agency from publishing an authoritat­ive list of EV models that are eligible for the incentive, and a $7,500 tax credit that a consumer “might” receive may prove to be a very weak incentive.

All the confusion is unfortunat­e. Consumers have enough reliable informatio­n to act decisively, and this appears to be a very good month to buy a qualified electric vehicle. The Mustang Mach-E and the Bolt EUV are temporaril­y eligible for the full credit, and they are excellent electric vehicles.

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