VW has the biggest portfolio of EVs qualifying for the full US EV tax credit

21 April 2023

The US Government has finally released the full list of requirements for its $7,500 EV tax credit. Until now most electric cars qualified because the battery rules haven’t been agreed on - well, that has changed. In essence, for a vehicle to qualify for the full tax credit, it has to be manufactured in the US and its battery has to be sourced from the US as well. The surprising winner thanks to the new rules is Volkswagen.

Since the VW ID.4 is manufactured in Chattanooga, Tennessee, it already qualified for at least partial tax credit - that’s $3,500. But the company confirmed that thanks to its US battery supplier, all ID.4 models now qualify for the full $7,500 discount.

That changes things quite a lot. First of all, the cheapest ID.4 in the US is priced at $38,995, still cheaper than the cheapest Tesla Model 3. That’s the ID.4 Standard model with the 62 kWh battery with an EPA rating of 209 miles. With the tax credit, the total price comes down to $31,495 - it makes the ID.4 one of the cheapest electric cars in this segment in the US.

What’s even more interesting is the fact that VW has 8 electric vehicles that qualify for the full $7,500 tax credit. For comparison, Tesla has only 4 EVs that can take advantage of the full amount, the entry-level Tesla Model 3 qualifies only for a $3,500 credit due to its Chinese battery.

Even Ford has only 2 electric vehicles qualified for the full amount - Mustang Mach-E only gets half the tax credit and it's all because of the battery origin. The second EV manufacturer with the biggest number of qualifying vehicles is Chevrolet - all of its 5 models are made in the US together with their batteries.

The new battery rules enforced by the US Department of Energy are not a surprise. They were introduced last year but they weren’t enforced as many manufacturers were trying to convince the government the new rules were unworkable. Well, the US government stuck to its plans and many cars no longer qualify for the tax credit.

While many foreign EV manufacturers cry foul, those who had foresight are benefiting right now. There is no question that investment in US EV and battery manufacturing is going up - billions of dollars have been already committed by many automakers and it seems the idea of the EV tax credit is working. Now it’s time for other governments around the world to learn from that and apply the lessons.

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