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I don’t have to tell you that American EVs are not as affordable as some foreign market options. Hell, the cheapest EVs in China can cost under $10,000. Conversely, the cheapest EV in the United States, the Nissan LEAF, starts at around $29,280. However, the government offers a federal tax credit to ease the financial strain on would-be buyers. That said, the latest “final assembly requirements” could prompt buyers to choose American EVs– or at least EVs with a North American finale. 

The federal government will incentivize you to buy American EVs with a federal tax credit that requires North American ‘final assembly’

The famed federal tax credit extends to clean vehicles like EVs, lessening the financial burden of purchase costs. Fortunately for would-be EV shoppers, the “Clean Vehicle Credit” can give a tax credit of up to $7,500 to car buyers. However, not every vehicle qualifies for the credit. 

Instead, vehicles have to meet certain criteria to qualify for either $3,750 or $7,500 credits. Here are some of the factors that dictate whether a new clean vehicle qualifies.

  • Taxpayer income
  • Vehicle type
  • The price of the new vehicle
  • Assembly location requirements 

As of the start of 2023, the Clean Vehicle Credit, a federal tax credit for ”new electric, fuel cell electric, and plug-in hybrid electric vehicles,” includes a final assembly requirement. Consequently, an EV won’t qualify unless it goes through final assembly in North America. However, it spells success for several American-made EVs, like the Tesla Model Y, Cadillac Lyriq, and Chevrolet Equinox EV. 

However, the final assembly requirement doesn’t mean the only clean vehicles to earn a tax credit wear domestic badges. Several EVs that meet the full, $7,500 federal tax credit criteria are models from non-domestic marques. For instance, the Volkswagen ID.4, Acura ZDX, and Honda Prologue qualify for the full $7,500 incentive. Incidentally, the Tennessee-built Volkswagen ID.4 took the No. 3 spot on the recent American-Made Index.

Source: U.S. Department of Energy

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Erik Sherman

Erik Sherman joined the MotorBiscuit team as an Autos Writer in 2022. An admitted petrolhead and an avid motorcyclist, Erik has owned everything from classic cars to motorcycles to modern driver’s cars. Erik also has extensive experience with military and emergency vehicles, ranging from ambulances and fire engines to MRAPs and M-ATVs. Erik is an eager car and motorcycle reviewer with experience covering everything from sports cars to pontoon boats and jet skis.

Erik holds a Bachelor’s Degree in International Relations (IRG) from the University of Texas at Austin and has studied Chinese, Energy, and European Politics at the University of Glasgow in Scotland. Erik’s background is unorthodox; he is a United States Marine Corps (USMC) combat veteran, water survival practitioner, and a former firefighter/EMT. Additionally, Erik is a regular volunteer and former instructor with the American Red Cross (ARC).