Globalization of mankind has been occurring ever since the concept of “greener pastures” was contrived in our discontented hearts. As far as automobiles are concerned, you’d be hard-pressed to prove that any of America’s “Big Three” are in fact, true American entities. Parts frequently cross borders on their way to state-side assembly plants, where cars are produced for both domestic and import markets. If distance and geography hurdles are too large to overcome, identical vehicles are often manufactured in other countries with different nameplates attached. While this may not be an entirely modern scenario, there have been a few recent dictates that have changed the determination to give a tax credit where credit is due, so far as a vehicle component’s origin.
Love or hate them, battery-powered cars have become part of our modern-day lexicon. Recently, the “EV” world was shaken by a variety of tax credit changes aimed at those purchasing an EV in 2024. Whether you would ever consider an electric car or not, I’d like to consider how the intent of these changes could be applied to the ICE world.
The gist of the new tax code focused on the vehicle battery’s manufacturing and country of origin. Starting January 1, 2024, the extent of the battery’s contents and manufacturing is being judged by how much of the materials and construction originates in North America. Vehicles with batteries that are manufactured state-side, but use imported materials, may now only get half of the tax credits that they received last year. If that battery gets shipped to the US as a complete battery, kiss any tax credit goodbye!
Bemoaning the loss of an EV’s tax credit on a site such as Chevy Hardcore is not the focus of this writing. Rather, ever since I read this story on our sister site “Electrified”, I’ve wondered how judging the entire vehicle’s nation of origin and giving tax credit for home-grown materials, would work in the overall car and truck market. Check out the Made In America Auto Index by the Kogod School of Business for an idea of how your favorite brand fared in home-based manufacturing this year, and in years prior.
I’m sure some would view this as an unfair advantage for the home team and give various reasons why it would not work, and should not be done. But here we are. It is being done. And, starting this year, eligible consumers can opt to claim the federal EV tax credit directly at the dealership as a discount on the purchase price!
Even if you don’t have a dog in this fight, you can rest easy, knowing that most of GM’s EVs will continue to get the full $7,500 tax credit, meeting the requirements for N.A.-based batteries and minerals. Now, why can’t we find a way to give a similar, geographically-based credit where credit is due for those still wanting ICE-powered vehicles?