EV tax credit changes mean low-income buyers can soon get full $7,500
The IRS released new guidance on the EV tax credit today, and the changes mean that starting next year, low- and middle-income buyers will be able to get the full $7,500 credit even if they don’t have enough tax liability.
The Inflation Reduction Act included big changes to the EV tax credit, and those changes were set to roll out over the course of the months and years after it passed.
One of those changes has to do with making the tax credit available upfront at the point of sale. This means that, instead of having to file for the credit on your taxes the year after you purchase an EV, you just get a cheaper car upfront.
One other issue with the tax credit was that it wasn’t available to customers who didn’t have enough tax liability to claim it. The credit is not “refundable” and can’t be rolled forward, so if you don’t make more than about $66,000 (absent other credits), you won’t have enough tax liability to reduce and therefore you leave some of the $7,500 on the table.
But the new changes announced today fix that, such that buyers of lower income levels will be able to get the full $7,500 credit, upfront at the point of sale.
The relevant part of the law is the new “transferability” provision that allows a buyer to transfer the EV tax credit to the dealership they are purchasing the car from. The dealer then passes the savings on to the buyer, and is reimbursed by the government with an advance payment of the tax credit.
It’s covered in the fact sheet the IRS released today, under Topic H, Q4
Q4: What if a buyer has insufficient tax liability to fully use a transferred credit? (added October 6, 2023)
A4. The amount of the credit that the electing taxpayer elects to transfer to the eligible entity may exceed the electing taxpayer’s regular tax liability for the taxable year in which the sale occurs, and the excess, if any, is not subject to recapture from the dealer or the buyer.
Here, “recapture” refers to the ability of the IRS to come seek you out if they decide that you’ve improperly filed for the credit. This question states that the credit is not subject to recapture, even if the buyer ends up having too little tax liability to otherwise benefit from it (and dealers don’t have to worry about it either, per Topic H, Q19).
This change does not remove the income cap present in the IRA law, which restricts the credit for taxpayers who make over $150,000 single/$225,000 head-of-household/$300,000 married. So high-income people still cannot claim the new credit, but low and middle-income people can.
The change goes into effect on January 1, 2024, so any EV purchased after that date from a registered car dealer will be able to take advantage of these transferability provisions.
Electrek’s Take
While we already covered the tax credit changes this morning, I wanted to write this article to specifically address what has been a big sticking point with the credit ever since its original inception back in 2008. President Obama even mentioned it in a State of the Union and made it a policy goal of his to make the credit available at point of sale.
The way the credit was previously designed was regressive, meaning that higher-income people were more able to benefit from it than lower-income people. This is something that should generally be avoided when creating policy.
It also meant that buyers might have to finance the additional $7,500, paying more interest and higher monthly payments for the lifetime of the car. In short, it just made electric cars less attainable to lower-income people, which is a shame, since they’re the ones who could benefit most from cheaper running costs and cleaner air in lower-income communities that tend to be more polluted.
While lower-income buyers don’t typically buy new cars, it’s certainly conceivable that someone making around the national average income ($59,000 less than the approximately $66,000 required for $7,500 of tax liability) might be able to buy a new Nissan Leaf at $28,000 base MSRP or upcoming Volvo EX30 at $35,000. Or if they’re lucky, maybe they can snag a Chevy Bolt that’s still in inventory at the beginning of next year, despite that car’s upcoming discontinuation in December.
Some might even be able to stretch for the new lower-priced Model 3 at $39,000, assuming Tesla prices or tax credit availability don’t change by next year, which they probably will. Although we certainly do not recommend that anyone stretch beyond their means to buy a new car just because it’s a Tesla – be sure to think about how this purchase would affect your finances, and if you still can’t afford a new car, you can always go with used.
Which brings to mind that, for low-income customers, this change should also apply to the used electric vehicle credit as well. This is available in a lower amount ($4,000) and has additional limitations on the vehicle purchase price. (The used EV must be under $25,000, and income caps are lower than on the new car credit)
There are also myriad other reasons that a buyer might be in a situation where they temporarily have lower tax liability than usual, or have access to other credits or refunds that lower their liability in a particular tax year, and might have otherwise jeopardized their ability to take the full EV tax credit. This change gets around many of those situations and should make it much easier for everyone to get the credit.
This is why when I originally wrote about the IRA tax credit changes, I used the headline “Senate improves EV tax credit.” While some of the changes added complexity, especially in the intervening year and a half as certain provisions have rolled out, overall it means that more cars will get the credit (by removing the cap of 200,000 per manufacturer), and the credit will be much easier to attain for those who seek it due to these transferability provisions.
Between this and the ability to bypass most requirements by leasing, EV tax credit availability is better than it’s ever been, and that’s great news for consumers, for EV makers, and for the environment.
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As I peruse Alibaba for all sorts of fun and interesting electric vehicles, I often stumble across seemingly outlandish products that often have a real use case behind them. The best of those make it into the recurring Awesome Weird Alibaba Electric Vehicle of the Week column, and that’s precisely where this man-carrying drone lands today.
To be fair, I’m not sure the main purpose of this flying EV is to carry people.
They do advertise it with a few images of a person suspended beneath it to show off the drone’s carrying capacity. And at least one of the photos seems like it’s actually non-recreational as the guy appears to be in the process of accessing a communications tower platform.
I guess for those who don’t want to spend half an hour climbing a ladder to change a light bulb or swap a connector, a drone might be a shortcut to some of these difficult access areas. It could also open up the worker pool for that job to not only people with Popeye’s forearms.
But manned work doesn’t seem like the main use case for a heavy-lift drone like this.
Instead, it appears to me that it’s primarily a work drone designed for utility tasks where you’d want to lift a serious amount of weight in tools or supplies.
The stated 200 kg (440 lb) weight-carrying capacity is quite impressive, especially since the unit only weighs 40 kg (88 lb) by itself. But you’ll want that extra lift potential for a number of its other advertised uses, such as a water sprayer for cleaning tasks or a heavy-lift drone for moving supplies in mountainous or otherwise hard-to-reach areas.
Some companies even seem to use them to clean wind turbine blades.
Interestingly, the drone can either run off of its 16 on-board batteries or can be tethered to an electrical cable for continuous flying. For longer duration jobs like window washing, that’s probably the better way to go.
The batteries only offer 20 minutes of flying time, and replacing 16 batteries with freshly charged units would probably take you another 20 minutes on the ground. That limited battery flight time also means that if you are going to use it to carry workers up onto aerial platforms, you better not take the scenic route.
The drone does come with three parachutes that can automatically deploy if it enters free fall, which makes me feel only marginally better about hanging onto that rope ladder and going for a ride.
The factory also advertises that the controls can be run tethered, so you don’t have to use radio frequency in areas where it might be jammed. That has me a bit worried about what other uses they’re envisioning for a heavy-lift drone like this, but I’ll leave that for another day.
With an advertised price of US $5,000, it also seems weirdly affordable. I have no idea what the going rate for a man-lift drone is these days, but I probably would have guessed more than that. You can barely buy an electric motorcycle for that much, and those only move in a single plane.
Of course, the catch is that you have to buy two of them, as that’s the minimum order quantity from the seller. So if you’re crazy enough to strap into one of these things, you better find an equally crazy friend for the second one.
And in case it wasn’t yet clear, please don’t actually try to buy one of these from Alibaba. This column is a tongue-in-cheek exercise in exploring just how amazing and interesting the world’s largest EV provider’s catalog of wacky vehicles has become. But I am certainly not encouraging anyone to run the financial and emotional gauntlet of trying to buy something expensive on Alibaba. I’ve been there and done that, and it’s not for the timid.
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China’s first major sodium-ion battery energy storage station is now online, according to state-owned utility China Southern Power Grid Energy Storage.
The Fulin Sodium-ion Battery Energy Storage Station entered operation on May 11 in Nanning, the capital of the Guangxi Zhuang autonomous region in southern China. Its initial storage capacity is said to be 10 megawatt hours (MWh). Once fully developed, the Station is expected to reach a total capacity of 100 MWh.
The state utility says the 10 MWh sodium-ion battery energy storage station uses 210 Ah sodium-ion battery cells that charge to 90% in a mindblowing 12 minutes. The system comprises 22,000 cells.
Once the project reaches 100 MWh, it could release 73,000 MWh of clean energy each year. That’s enough to power 35,000 households and reduce carbon dioxide emissions by 50,000 tonnes annually.
In an interview with China Central Television, Gao Like, a manager at the Guangxi branch of China Southern Power Grid, said that the energy conversion efficiency of its sodium-ion battery energy storage system exceeds 92%. It’s comparable to the efficiency of common lithium-ion battery storage systems, at 85-95%.
Chen Man, a senior engineer at China Southern Power Grid, said [via the South China Morning Post] that once sodium-ion battery energy storage enters the stage of large-scale development, its cost can be reduced by 20-30%. He continued:
This can be achieved through further improvements in the sodium-ion battery structure, manufacturing process, material utilization, and cycle life, thus lowering the energy storage cost per kilowatt-hour of electricity.
Large-scale sodium-ion batteries are gaining momentum due to their lower cost and abundance of raw materials compared to lithium-ion batteries. The challenges with sodium-ion batteries have been lower energy density and shorter lifespans that can limit efficiency and long-term performance in large-scale applications.
Read more: A new sodium-ion battery breakthrough means they may one day power EVs
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Environment
You can now lease a Rivian R1T for cheaper than the Nissan Titan, starting at $559/month
If you’ve been eyeing a new Rivian R1T, now may be the time to start shopping. Rivian is offering R1T lease rates as low as $559 per month, which is even cheaper than the Nissan Titan.
After introducing leasing for the R1T last November, Rivian is already offering some massive savings opportunities.
Rivian is offering R1T lease configurations for as low as $559 per month. That’s for a new 2024 Rivian R1T Standard Adventure Package and includes $7,500 in lease cash.
The offer is for a 36-month lease with 30,000 total miles with $7,454 due at signing. That amounts to $766 per month. Total vehicle pricing totals $71,700, including Dual Motor AWD, 21″ Wheels, LA Silver Paint, Black Mountain interior, and a $1,800 destination fee.
Although the Nissan Titan’s MSRP is about $24,000 cheaper, the Rivian R1T is still the better lease deal.
Nissan has the 2024 Titan listed at $659 for 36 months. That’s with $5,949 due at signing, according to online research firm CarsDirect. The offer is based on an MSRP of $52,380 for the SV 4×2 Crew Cab model and 10,000 miles a year, which amounts to $824 a month.
Rivian R1T is not the only EV lease getting cheaper
The difference maker is the incentives. We’ve seen it with other models like the Hyundai IONIQ6/5 and Kona Electric.
Kia is also offering up to $12,000 off 2024 EV6 and EV9 models with massive stackable incentives.
GM cut prices on its Blazer EV, while deliveries of the new Equinox EV are now underway. The Equinox EV (2LT) currently starts at $43,295, but the $34,995 (1LT) version will be available later this year. With the $7,500 credit, the Equinox EV can be bought for as little as $35,795.
Rival Ford also slashed prices on the Mach-E by 17% earlier this year, driving triple-digit volume growth. Meanwhile, Ford has introduced several incentives for the F-150 Lightning as it looks to keep its title of top-selling EV pickup in the US.
With up to 410 miles range, an 83.9″ long extendable tailgate, up to 11,000 lbs towing, and a 0 to 60 mph sprint in 3 seconds, the R1T is built to upgrade your next adventure.
Rivian added R1S leasing options in January. The Rivian R1S can be leased for as little as $639 per month. That’s also for 36 months (30,000 miles total), with $8,534 due at signing.
Rivian’s R1S electric SUV was the seventh best-selling EV in the US last year, topping the Ford F-150 Lightning and Tesla Model X, as demand for large electric SUVs continues to grow.
If you’re ready to see what Rivian has to offer at some of the lowest prices so far, we can help you get started. You can use our links below to view deals on the Rivian R1S and R1T in your area.
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