Rule delay makes big EV tax credit possible early next year

WASHINGTON (AP) — People who want to buy an electric vehicle could get a bigger-than-expected tax credit come Jan. 1 because of a delay by the Treasury Department in drawing up rules for the tax breaks.

The department said late Monday it won't finish the rules that govern where battery minerals and parts have to be sourced until sometime in March.

As a result, it appears that buyers of EVs assembled in North America with batteries made in the U.S., Canada or Mexico will be eligible for a full $7,500 tax credit under the Inflation Reduction Act. The act calls for the batteries' minerals and parts to also come from North America in order to get the full tax break, but that provision has been temporarily put on hold.

The auto industry is watching the situation closely, but it could cause a rush to dealers because most, if not all EVs aren't expected to qualify for the full credit when the rules are all in place.

Experts say most automakers won’t be able to comply with requirements that the battery components come from North America. For instance, General Motors already has said that it expects its EVs to get only half the tax credit, or $3,750, until at least 2025.

So people who buy early next year before the rules are announced could pocket an extra $3,750.

“I imagine there will be a rush,” on EV dealers to get the extra savings, said Sam Abuelsamid, principal e-mobility analyst with Guidehouse Research.

In the meantime, Treasury said it will release information by year's end on the “anticipated direction" of the rules to help automakers identify eligible EVs, the department said in a statement. But the rules won't be effective until March.

Other requirements, like new caps on a buyer's income and price of the EV, will still take effect Jan. 1.

“It should allow some...