$135M in EV Tax Credits Disbursed to Dealers Already in 2024

As of Jan. 1, EV buyers can transfer federal tax credits to dealerships at the point of sale, effectively reducing their purchase price.

More than 11,000 U.S. auto dealers registered for the program. Image via Shutterstock.

The U.S. government's recent shift to offer immediate electric vehicle tax credits at the point of sale has led to a $135 million disbursement to auto dealers within just over a month, Reuters reported.

In previous years, U.S. auto buyers could only benefit from the $7,500 new EV credit or $4,000 used EV credit at tax filing time the following year.

The new policy, which went into effect Jan. 1, allows consumers to transfer the credits directly to car dealers at the time of sale, effectively reducing the purchase price of the vehicle on the spot.

The IRS has processed advance payment requests for 17,500 new EVs and 2,000 used vehicles, with more than 11,000 U.S. auto dealers registered for the program.

"One month into implementation of this provision, there is strong demand for this new upfront discount, which will continue momentum in growing this industry in the United States," Deputy Treasury Secretary Wally Adeyemo said in a statement.

However, the transition has not been without its challenges. In January, the eligibility for tax credits was revised for several EVs due to new battery sourcing rules, impacting popular models like the Nissan Leaf, some Tesla Model 3s, Chevrolet Blazer EV, Cadillac LYRIQ, Ford Mustang Mach-E and Ford E-Transit. These guidelines, issued by the Treasury in December, aim to decrease the U.S. EV supply chain's reliance on China, reducing the number of EV models qualifying for tax credits from 43 to 19 at the start of the year.

The August 2022 Inflation Reduction Act law introduced these changes to the EV tax credit system, mandating vehicles must be assembled in North America to qualify and setting income and vehicle price restrictions to ensure the credits benefit a broader range of consumers while promoting domestic production.

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