Understanding — and explaining — revised federal electric vehicle tax credits is, for now, a complicated task.
But it’s important that the industry has the necessary information to share with consumers if mass adoption of EVs is going to happen, panelists said Thursday at the Automotive News Retail Forum: NADA.
“It’s a little confusing, and it’s a little crazy,” said Michelle Primm, managing partner of Cascade Auto Group in Ohio, who said she advises customers to call their tax accountants.
“It’s way too confusing, and let’s face it: We all know when something’s too confusing, people just walk away,” Primm said.
The revised EV tax credit under the Inflation Reduction Act is worth up to $7,500 on new vehicles, but whether a vehicle qualifies ultimately will depend on where battery components and critical minerals are sourced. The Treasury Department delayed until March the release of proposed guidance on requirements for battery components coming from North America and minerals sourced from the U.S. or free-trade partners. That has created uncertainty among dealers and consumers.
Buddy Dearman, national industry leader of Forvis’ dealership practice who specializes in tax issues, said some of that uncertainty includes the possibility that a vehicle could qualify when it’s ordered but fall outside the scope of the credit when the customer takes delivery if Treasury’s guidance comes in between the two events.
One thing that could help? A commercial clean vehicle credit that could allow new EVs leased by consumers to qualify for the credit, which doesn’t carry the same eligibility requirements for buyers, Dearman said.
“The dealer doesn’t have to worry about trying to verify anybody’s income,” he said. The owner of the EV would be the leasing company, and “you presume that they’ll adjust the capitalized cost or the rate or the residual. They’ll do something economically to make it where the customer benefits from the credit.”
