Cars assembled outside NA may qualify for EV tax credit, per new IRS note
The US Treasury has released new guidelines on the electric vehicle tax credit in the Inflation Reduction Act, which seem to suggest that leased vehicles can qualify for the EV tax credit even if they were assembled outside of North America, Reuters reports.
The Inflation Reduction Act significantly changed the way the EV tax credit works, and among those changes was a requirement that cars undergo final assembly in North America in order to qualify. The intent of this section is to bring EV manufacturing to the US in order to give the country a leg up in the future of the auto industry.
The provision received sharp pushback from foreign automakers, particularly Hyundai and Kia, that currently sell more electric cars in the US than any other foreign automaker.
Both companies are establishing battery and car factories in the US, but those won’t be open for a few years, leaving them in the lurch for credits for the time being.
But today, the IRS released a fact sheet of frequently asked questions about the tax credits, which suggests that foreign-made EVs may qualify for tax credits through the commercial vehicle section of the law.
The law includes two major sections detailing tax credits. The standard credit is covered under section 30D, while the commercial vehicle credit is covered under section 45W. When describing section 30D, the IRS mentions that qualifying vehicles can’t be acquired for resale purposes, must be made by a qualified manufacturer, must be 4-wheeled electric vehicles driven by a >7kWh battery, must be under 14k pounds GVWR, and must be assembled in North America.
But section 45W reads thusly:
Q2. What is a “qualified commercial clean vehicle”? (added December 29, 2022)
A2. A “qualified commercial clean vehicle” is defined as any vehicle of a character subject to the allowance for depreciation that:
- Is made by a qualified manufacturer,
- Is acquired for use or lease by the taxpayer and not for resale,
- Is treated as a motor vehicle for purposes of title II of the Clean Air Act and is manufactured primarily for use on public streets, roads, and highways (not including a vehicle operated exclusively on a rail or rails), or is mobile machinery, as defined in § 4053(8) of the Code, and
- Is propelled to a significant extent by an electric motor which draws electricity from a battery that has a capacity of not less than 15 kilowatt hours (or, in the case of a vehicle that has a gross vehicle weight rating of less than 14,000 pounds, 7 kilowatt hours) and is capable of being recharged from an external source of electricity, or satisfies the requirements under § 30B(b)(3)(A) and (B) of the Code for being a new qualified fuel cell motor vehicle.
Note, 45W does not mention North American final assembly.
Later in the same fact sheet, another question comes up:
Q5. Is a taxpayer that leases clean vehicles to customers as its business eligible to claim the qualified commercial clean vehicle credit? (added December 29, 2022)
A5. Whether a taxpayer can claim the qualified commercial clean vehicle credit in its business depends on who is the owner of the vehicle for federal income tax purposes. The owner of the vehicle is determined based on whether the lease is respected as a lease or recharacterized as a sale for federal income tax purposes.Q6. What factors are used to determine if a transaction is a “lease” for tax purposes? (added December 29, 2022)
A6. Based on longstanding tax principles, the determination whether a transaction constitutes a sale or a lease of a vehicle for tax purposes is a question of fact. Features of a vehicle lease agreement that would make it more likely to be recharacterized as a sale of the vehicle for tax purposes include, but are not limited to:
- A lease term that covers more than 80% to 90% of the economic useful life of the vehicle
- A bargain purchase option at the end of the lease term (that is, the ability to purchase the vehicle at less than its fair market value at the end of the term) or other terms/provisions in the lease that economically compel the lessee to acquire the vehicle at the end of the lease term
- Terms that result in the lessor transferring ownership risk to the lessee, for example, a terminal rental adjustment clause (TRAC) provision that requires the lessee to pay the difference between the actual and expected value of the vehicle at the end of the lease.
In short, for a leased vehicle, the commercial tax credit can be taken by the lessor, regardless of whether the vehicle was assembled in the US. This means dealerships can get $7,500 in tax credits for each leased EV.
This credit, then, could be passed on to the consumer in the form of reduced lease payments, as the dealership will effectively recognize an additional $7,500 in revenue from the lease of that vehicle.
The “old” tax credit worked similarly on leased vehicles, which was one way that low-income taxpayers could get around the limitation that the credit was not refundable, which means that anyone with less than $7,500 in federal tax liability couldn’t benefit from the full credit.
This is also why there have been many EV lease deals in the past, with vehicles like the Nissan Leaf and Fiat 500e, each with MSRP around $30k, leasing for $99/mo or less (as opposed to the expected approximate $300 per month for a $30k car), as dealers could recognize tax credits to effectively reduce the price of those vehicles. Those deals no longer exist in this production-constrained and high-demand EV sales environment, though similar deals may return if the market ever flattens out.
US Senator Joe Manchin responded to this announcement, calling this a “dangerous interpretation” and asked the Treasury to pause implementation of the EV tax credit, claiming that domestic manufacturing is a primary intent of the law:
Manchin was the crucial 50th vote to get the Inflation Reduction Act passed in the Senate.
Electrek’s Take
Well, it does seem like this is a generous interpretation. In my reading of the law, I’m not sure I would interpret it that way to the point where it took me a while to understand this point of view, and I didn’t want to write this article immediately because I thought surely Reuters had gotten something wrong in their reporting.
However, the implementation of the law really was unfair to foreign automakers, who were not given enough time to prepare for it. The fact that those credits were stripped with only days’ notice, leading to a scramble to figure out how to secure credits for manufacturers and consumers, not only created confusion but also resulted in some of the best vehicles on the road today (like the excellent Hyundai Ioniq 5) being left out of tax credit availability.
It was also unfair to EV buyers because many were left out of credits due to the arcane nature of these changes. It has taken us a lot of time to understand them, and even communicating those changes to our readers can get complicated, as you can see above.
I even got an email from someone this week pointing to the IRS’ Qualified Clean Vehicle page, which until today, had not been updated with information from the Inflation Reduction Act. It still stated that the Hyundai Ioniq 5 qualified for tax credits, which was true before August 16 but not true afterward. The buyer wondered if they qualified for tax credits, and I had to break the news that they didn’t. Now, we find out that if they had simply leased the vehicle, they could have gotten the credit, which is a pretty unfortunate circumstance.
So the implementation of this law has been quite rocky. But at the time it passed, I stated many times that I hoped and thought that the IRS would eventually announce lenient guidance on its implementation to make up for the unfairness of how it was implemented.
Today, they’ve done so. While I think the interpretation is very generous based on the text of the law, I do also think that it is fair based on the difficult situation regarding its implementation. Unfortunately, there was a lot of confusion and some people got left out in the interim, but going forward, allowing more vehicles to claim the credit can only be good for EV adoption.
We’ll be updating our EV tax credit guide with any new changes as they come in, so check back for the latest news.
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Environment
Rivian and Ben & Jerry’s just dropped an electric ice cream truck: Meet the sweet new EV
Imagine seeing this as the next ice cream truck rolling through your neighborhood? Yep, Rivian and Ben & Jerry’s teamed up to create the electric ice cream truck we’ve been waiting for. The “Scoop Truck” will be hitting the road to hand out ice cream this week and honestly, it looks pretty sweet.
Rivian and Ben & Jerry’s unveil electric ice cream truck
What’s better than an ice cream truck? An electric one. The Rivian and Ben & Jerry’s mashup gives us a sneak peek at the ice cream truck of the future.
The “Scoop Truck” will officially debut at South by Southwest (SXSW) in Austin, Texas, this week. Fans can stop by to get a first look at the electric truck (and maybe a sweet treat to go with it).
After that, the scoop trucks will hit the road, stopping at Rivian community events. You can also catch it at upcoming events in Vermont, Ben & Jerry’s home state.
The electric scoop truck is based on Rivian’s Commercial Van, which was launched last month in the US. You may have seen the Rivian Electric Delivery Vans (EDVs) for Amazon roaming through your neighborhood. After ending its exclusivity agreement, Rivian is now open to other partnerships, like with Ben & Jerry’s.
Rivian said its Commercial Van “will allow for more events, more catering gigs, and dishing out more ice cream than ever” with up to 161 miles of range.
Sean Slattery, Ben & Jerry’s US integrated Marketing Project lead joked that “Rivian helped Ben & Jerry’s reduce our reliance on fossil fuels in a small way, while making things a little bit cooler… which, as an ice cream company, is extremely difficult to do.”
Rivian’s electric van is available in two models: the Delivery 500 and 700, starting at $79,900 and $83,900, respectively. The smaller (Delivery 500) van is designed for getting around city streets, while the larger (Delivery 700) model includes extra space (652 cu ft) for more cargo and storage.
Rivian and Ben & Jerry’s are two companies fighting for a cleaner future, so the “sweet” partnership makes sense. What do you think of the electric ice cream truck? Let us know in the comments below.
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Elon Musk tried to pump Tesla’s stock (TSLA) by claiming a 10x increase in profits, but it failed. In fact, the stock is down 10% since Musk’s pump.
After an analyst posted a prediction that Tesla would increase its profits by 256%, Tesla CEO Elon Musk responded
It will require outstanding execution, but I think more like 1000% gain for Tesla in 5 years is possible.
The comment was quickly propagated by Elon fans and the community of “Tesla all-ins” as being a sign that Musk, who is quite busy with X and DOGE lately, still believes in Tesla.
And yet, Tesla’s stock is down 10% since Musk’s pump:
There are a few factors at play here. Mostly, it’s just not a great pump and shows Musk is disconnectedness with Tesla and its shareholders.
Many of his fans took it as a “1000% or 10x increase in Tesla’s stock”, but the analyst Musk was responding to was talking about profits.
At the time of the tweet, Tesla was trading at 150x profits. With a P/E of 15, Tesla’s stock price already assumed a roughly 10x increase in profits over the next few years.
Therefore, Musk saying that with “outstanding execution,” he “thinks” Tesla could “possibly” achieve a “more like” 10x increase in profits in “5 years,” is just not the pump that his fans thought it was. In fact, it was basically him saying that Tesla is currently priced for perfect execution.
Despite the drop in the last two days, Tesla is still trading at a price-to-earnings ratio of ~130.
Electrek’s Take
I think this shows how disconnected Elon is from Tesla and its shareholders. They thought, and he probably did too, that this would be a great pump, but it’s simply not.
Especially not amid protests and boycotts against Tesla while the company already had demand issues.
They are clinging to the idea that the Model Y refresh will save the company and return it to growth, but I don’t see that happening right now.
I think that Elon distancing himself from Tesla would be the only thing that would help right now, and it doesn’t look like it will happen. So, the shareholders will have to push him out, which won’t happen until the stock price motivates them.
We are still quite a bit away from that, but I think it’s headed in that direction fast.
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![Waymo One begins autonomous rides in Austin, Texas, exclusively through Uber [Video]](https://i0.wp.com/electrek.co/wp-content/uploads/sites/3/2025/03/Waymo-Austin-Uber.jpg?resize=1200,628&quality=82&strip=all&ssl=1)
Starting today, the fully autonomous Waymo One ride service is available exclusively to customers in Austin, Texas through the Uber app. Today’s news builds upon Waymo’s existing partnership with Uber and is a milestone in the robotaxi startup’s expansion to new cities around the US.
As promised, robotaxi developer Waymo is expanding its Waymo One service to new US cities. While much of the world is still not completely sold on the plausibility of full-fledged robotaxi operations across major metropolitan areas, Waymo is trekking forward in its operations and has the data to prove it is, in fact, safer in many ways.
With the financial backing of parent company Alphabet Inc. (Google) and a $5.6 billion influx of cash secure in 2024, Waymo has been able to expand robotaxi operations in cities like Los Angeles, San Francisco and Phoenix.
At the time of the Series C funding announcement mentioned above, the mobility company detailed plans to expand its Waymo-One rideshare services to new cities like Austin, Texas, and Atlanta, Georgia in 2025 through an ongoing partnership with Uber.
Today, Waymo has confirmed that fully-autonomous rides are now available in Austin through the Uber app. Be sure to check out the video from Waymo below.
Waymo One operational around 37 square miles of Austin
Waymo confirmed the start of fully autonomous robotaxi services in Austin today through a social media post. According to Waymo, Uber users who request an Uber X, Uber Comfort, Uber Green, or Uber Comfort Electric will have the opportunity to opt in and match with Waymo’s autonomous vehicles (when available).
Riders who are matched with a Waymo One-equipped EV, currently the Jaguar I-Pace (RIP), will be able to travel within a 37-square-mile footprint around much of Austin, including Hyde Park, Downtown, and Montopolis. Through the Uber app, riders will see options to unlock the Waymo One vehicle’s doors, open the trunk, and begin their ride once they are inside.
Today’s rollout stems from a multi-year partnership between Waymo and Uber. Austin is the first market where Uber is managing and dispatching Waymo vehicles, so it will be an important one to keep and eye on to see how everything runs and how the public responds.
As previously announced, the partnership with Uber also includes robotaxi expansions to the public in Atlanta, Georgia, later this year. As we reported in December 2024, Miami is also in the works for a 2026 rollout. While we await those expansions, here’s some footage of the Waymo One rollout in Austin.
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