U.S Treasury Announces that Leased EVs Are Eligible for Clean Vehicle Tax Credits

On December 29, the U.S. Treasury Department declared that electric vehicles Leasing by consumers may qualify for up to $7,500 in commercial clean vehicle credits Beginning January 1, 2023

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International automakers are now open to the possibility of this announcement. They had earlier urged the Biden administration for a commercial electric vehicle credit to increase consumer EV access following the passage of the $430 billion U.S. Inflation Reduction Act. This Act, which ended $7,500 in consumer tax credits for electric cars made outside North America, passed earlier this month.

Sen. Joe Manchin, a Democrat who chairs the energy panel, was not pleased with the development, and pressured Treasury to halt implementation of both commercial and new consumer EV tax credits, saying Treasury had rewarded “companies looking for loopholes,” Reuters reported. Manchin said he would seek legislation to stop “this dangerous interpretation from Treasury.”

It seems that production is what matters and who gets what. It is unclear where materials will come from for the new EV battery. The U.S. Treasury announced earlier this month it would delay guidance regarding sourcing requirements until March.

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Currently, we know that at least 40% are required to be sourced from North America. The percentage increases by 10% every year thereafter. Also, at minimum 50% must be made in North America for each eligible EV battery. That percentage will go up by 10% every year after that.

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