U.S. Issues $135 Million in Advance EV Tax Rebates Since Jan. 1

In a significant move towards incentivizing EV adoption, the U.S. government has announced that it has reimbursed auto dealers for approximately $135 million in advance point-of-sale consumer electric vehicle tax credit payments since the beginning of the year through Feb. 6, according to the Treasury's latest disclosure on Wednesday.

Before 2024, U.S. auto buyers were limited to availing the $7,500 new electric vehicle credit or $4,000 used EV credit only when they filed tax returns in the subsequent year. However, starting from January 1st, consumers now have the option to transfer these credits to a car dealer at the time of purchase, effectively reducing the vehicle's purchase price upfront.

The Internal Revenue Service (IRS) has reported receiving over 25,000 time-of-sale reports, with more than 19,500 requests for advance payments, constituting approximately 78 percent of the total. Treasury revealed that around $135 million has been disbursed to dealers since the inception of the program this year.

"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," remarked Deputy Treasury Secretary Wally Adeyemo in a statement.

The advance payment requests comprise 17,500 for new EVs and 2,000 for used vehicles. Notably, more than 11,000 U.S. auto dealers have registered for the program, with over 8,000 seeking advanced payments.

January saw several EVs losing eligibility for tax credits following the enforcement of new battery sourcing rules. Models such as the Nissan Leaf, certain Tesla Model 3s, Chevrolet Blazer EV, Cadillac Lyriq, Ford Mach-E, and Ford E-Transit were among those affected.

The Treasury, in December, issued guidelines aimed at diversifying the U.S. electric vehicle supply chain, with an emphasis on reducing reliance on China. While the number of EV models qualifying for U.S. EV tax credits reduced to 19 from 43 on Jan. 1, Volkswagen regained eligibility for versions of its ID.4 EV.

Consumers are required to confirm their compliance with income limits at the time of purchase to qualify for the tax credit; failure to do so would necessitate repayment to the government during tax filing. For new vehicles, the adjusted gross income limit stands at $300,000 for married couples and $150,000 for individuals.

The August 2022 Inflation Reduction Act brought significant reforms to the EV tax credit, including assembly requirements in North America, removal of manufacturer caps on credits, imposition of income and vehicle price restrictions, and extension of credits to leased vehicles.

This initiative signifies a substantial step towards fostering the widespread adoption of electric vehicles across the United States, aligning with broader efforts towards sustainability and reducing carbon emissions in the transportation sector.