New EV tax credit requirements will challenge automakers' plans

Stop locking in orders and exploiting loopholes. President Biden signed the Inflation Reduction Act, which changes the rules for getting a federal tax credit for a new electric vehicle. Restricted cars could change automakers' future strategies.

Before the act became law today, automakers like Rivian, Lucid, and Fisker helped reservation holders turn orders into binding agreements to qualify for tax credits. Now, these companies and other EV automakers must decide how to proceed given the new rules.

To be eligible, a large percentage of the vehicle must be built in North America or a US trade partner.

According to Autonews, 40% of a vehicle's critical minerals must be extracted or processed in one of the above locations before 2024.

Also, 50% of battery components must be made or assembled in those locations. For the tax credit, the final vehicle assembly must be in North America. This law dampens hopes that cheap Chinese EVs will make it over here.

The new law limits vehicle eligibility by price. Rivian's base R1T is under the $80,000 credit limit, but most final builds are higher. Lucid has no electric sedans that meet the $55,000 limit.

As they plan future products, automakers and the EV market must consider all of these factors. This isn't a one-box deal. To qualify, automakers must follow all of these rules.