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It’s no secret that the United States wants to control the availability of Chinese electric cars and other EVs for American buyers. However, with Chinese-built EVs like the Polestar 2 and Volvo EX30 hitting the U.S. market, the government instituted measures to encourage buyers to find their green vehicles elsewhere. For instance, Chinese electric cars don’t qualify for a federal clean vehicle tax credit. However, an IRS ruling opens up a tax credit for customers to lease a Chinese electric car.

An IRS ruling recently qualified Chinese electric cars for a tax credit– as long as they’re leased

Any cursory internet search will reveal questions like “Why are Chinese electric cars not sold in the US?” Well, the truth is that they are. Just not in the way you might think. No, you won’t yet see BYD, NIO, or Geely-badged EVs cruising American streets. However, there are other avenues. For instance, Geely famously owns Volvo and Polestar, two Swedish brands with Chinese-built EVs already in the U.S.

One of the culprits behind the lack of Chinese EVs on American roads? A heaping 27.5% tariff disincentivizes brands from importing their budget-friendly electric cars. And that’s not the end of it; AP News reports that the Biden Administration may levy a 100% tariff on Chinese EVs. 

Still, the Chinese-built Volvos and Polestars are here and reaching the hands of U.S. drivers. That said, car shoppers in the U.S. also have a government obstacle to deal with upon buying a Polestar 2 or Volvo XC40: the absence of the $7,500 federal clean vehicle tax credit. 

American car buyers are already purchasing and leasing Chinese electric cars like this Polestar 2.
A Polestar 2 in production | Polestar

That’s right; Chinese-built EVs don’t qualify for the $7,500 incentive the U.S. Government offers for new electric vehicles. However, that doesn’t mean car shoppers with their sights set on a Chinese-built are out of luck. According to TrueCar, customers looking to lease a Chinese-built electric car like the Polestar 2 are exempted from restrictions. 

However, it’s not just Chinese EVs. The U.S. Department of Energy’s latest regulations on the subject exclude European models as well. Specifically, the DOE mandates that all vehicles “must undergo final assembly in North America” to qualify. As such, vehicles like the Ford Mustang Mach E qualify, while the Volvo XC40 does not.

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Staff Writer

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).