By David Shepardson
(Reuters) -The U.S. Treasury said Monday that Volkswagen, BMW, Nissan, Rivian, Hyundai and Volvo electric vehicles will lose access to a $7,500 tax credit under new battery sourcing rules.
The Treasury said the new requirements effective Tuesday will also cut by half credits for the Tesla Model 3 Standard Range Rear Wheel Drive to $3,750 but other Tesla models will retain the full $7,500 credit.
Vehicles losing credits Tuesday are the BMW 330e, BMW X5 xDrive45e, Genesis Electrified GV70, Nissan Leaf, Rivian R1S and R1T, Volkswagen ID.4 as well as the plug-in hybrid electric Audi Q5 TFSI e Quattro and plug-in hybrid (PHEV) electric Volvo S60. The Swedish carmaker is 82%-owned by China’s Zhejiang Geely Holding Group.
The rules are aimed at weaning the United States off dependence on China for EV battery supply chains and are part of President Joe Biden's effort to make 50% of U.S. new vehicle sales by 2030 EVs or PHEVs.
Hyundai said in a statement it was committed to its long-range EV plans and that it "will utilize key provisions in the Inflation Reduction Act to accelerate the transition to electrification."
Rivian declined to comment and the other automakers could not immediately be reached for comment.
Treasury also disclosed General Motors electric Chevrolet Bolt and Bolt EUV will qualify for the full $7,500 tax credit.
GM said earlier it expected at least some of its EVS would qualify for the $7,500 tax credit under the new rules, including the 2023 Cadillac Lyriq and forthcoming Chevrolet Equinox EV SUV and Blazer EV SUV. Treasury said all GM EVs will qualify.
Earlier, Ford Motor and Chrysler-parent Stellantis said most of their electric and PHEV models would see tax credits halved to $3,750 on April 18. Treasury confirmed the automakers' calculations.
The rules were announced last month and mandated by Congress in August as part of the $430 billion Inflation Reduction Act (IRA).
The IRA requires 50% of the value of battery components be produced or assembled in North America to qualify for $3,750, and 40% of the value of critical minerals sourced from the United States or a free trade partner for a $3,750 credit.
The law required vehicles to be assembled in North America to qualify for any tax credits, which in August eliminated nearly 70% of eligible models and on Jan. 1 new price caps and limits on buyers income took effect.
Last week, the Environmental Protection Agency proposed new emissions rules that forecast 60% of new vehicle sales in 2030 would be EVs.
A preliminary administration analysis found nearly 65% of first quarter EV sales qualified under North American final assembly and price cap requirements; more than 90% of those previously eligible first quarter sales remain eligible for at least a $3,750 credit.
Treasury in December said EVs ineligible for the $7,500 consumer tax credit could qualify for a commercial leasing $7,500 credit.
(Reporting by David Shepardson; Editing by Susan Fenton)Click Here To Get Funded!