Type to search

New Battery Rules Cut Nissan, Tesla EVs From US Tax Credits

The new requirements, issued in December, seek to reduce US reliance on China in its electric-vehicle supply chain

Tesla's new Cybertruck is shown on display at a Tesla store in San Diego, California, US
Tesla's new Cybertruck is shown on display at a Tesla store in San Diego, California, US. Photo: Reuters


Several electric vehicles from Nissan and Tesla will no longer qualify for US tax credits of up to $7,500 as new battery sourcing rules take effect from Monday.

The new requirements, issued in December, seek to cut the reliance of the US electric vehicles’ supply chain on China.

EVs losing out on credits will include the Nissan Leaf, Tesla Cybertruck All-Wheel Drive, some Tesla Model 3s and Chevrolet Blazer EV, the US Treasury said.


Also on AF: Dutch Block ASML From Shipping Top Chip Machines to China


The number of EV models qualifying for US EV tax credits have effectively been reduced from 43 to 19. Those figures include different versions of the same vehicle type. Treasury said some manufacturers have yet to submit information on eligible vehicles, which could lead to changes in the list.

Tesla did not immediately comment Monday but said on its website: “Cybertruck is likely to qualify for the federal tax credit later in 2024.”

The new rules allow buyers to claim the tax credit of up to $7,500 at a participating dealership at the point of sale. The tax credit sets limits on vehicle price and buyer income to qualify.

The Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, Cadillac Lyriq and Ford E-Transit are among the vehicles that fell off the list of vehicles eligible for tax credits.

Volkswagen said on Monday it “is in the process of confirming eligibility for a federal EV tax credit for vehicles” after January 1.

“We are optimistic that MY2023 ID.4s and all MY2024 ID.4s will be eligible under the new rules,” VW added.

BMW did not immediately comment.


Adjusting supply chains

Nissan said it was working with suppliers in an effort to meet changing requirements “and regain tax credit eligibility for the Nissan Leaf in the future.”

The Treasury said “automakers are adjusting their supply chains to ensure buyers continue to be eligible for the new clean vehicle credit, partnering with allies and bringing jobs and investment back to the United States.”

Ford Motor said last month its E-Transit would lose the $3,750 tax credit, as would the Mach-E and Lincoln Aviator Grand Touring plug-in hybrid, but its F-150 EV Lighting and the Lincoln Corsair Grand Touring retained credits.

General Motors noted all of its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding the Lyriq and Blazer EV are losing the credit because of two minor components.

GM expects after a sourcing change the Lyriq and Blazer EV will regain eligibility in early 2024 and said its Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV and Cadillac OPTIQ produced “after the sourcing change will be eligible for the full incentive.”

The 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models at the time.

Most carmakers, however, heavily rely on China for batteries and critical minerals like refined lithium and nickel.

Tesla disclosed in December its Model 3 Rear-Wheel Drive and Long Range vehicles would lose federal tax credits starting January 1. The Model 3 Performance retains the $7,500 credit.


  • Reuters, with additional editing by Vishakha Saxena


Also read:


China Slams Plan to Cut it From US EV-Battery Supply Chain


China Battery Firms Pump $4.4bn Into Korea for US EV Credits


Tesla Gains $31m Shanghai Land For New Megapack Battery Plant


Ford Halts Work on $3.5bn CATL-Backed US Battery Plant


China Turns Focus on Rare Earths Sector Amid Trade War With US


China Curbs The Export of Rare Earths Processing Technology


Western Firms Struggling to Break China’s Grip on Rare Earths



Vishakha Saxena

Vishakha Saxena is the Multimedia and Social Media Editor at Asia Financial. She has worked as a digital journalist since 2013, and is an experienced writer and multimedia producer. As a trader and investor, she is keenly interested in new economy, emerging markets and the intersections of finance and society. You can write to her at [email protected]


AF China Bond