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Are you in the market for a new or used car? If so, you’re probably wondering about the latest auto loan rates and how to qualify for the lowest APR. Whether you’re a first-time buyer or an experienced shopper, understanding auto loan rates is essential to making a smart financial decision. Let’s take a look at current car loan rates this month by credit score. Plus, we’ll go over how to qualify for the lowest APR.
Current Auto Loan Rate APRs by Credit Score
Before we dive into the details, it’s important to know that auto loan rates vary based on several factors, including the loan term, the type of car (new or used), and, most importantly, your credit score. To give you an idea of what to expect, we’ve put together a table template that breaks down the average auto loan rates by credit score for both new and used cars.
First, here’s a reminder of how credit scores are categorized for car loans:
Credit Score Category
Score Range
Super Prime
781 – 850
Prime
661 – 780
Nonprime
601 – 660
Subprime
501 – 600
Deep Subprime
300 – 500
These are the latest car loan APRs by credit score:
Opt for a shorter loan term: Although a longer loan term may result in lower monthly payments, it will also lead to higher overall interest payments. By choosing a shorter loan term, you can save money on interest and pay off your loan faster.
Make a larger down payment: By making a larger down payment, you can reduce the amount you need to borrow, which may help you qualify for a lower interest rate.
Improve your credit score: Your credit score plays a significant role in determining the interest rate you’ll receive on an auto loan. By improving your credit score, you can potentially save thousands of dollars in interest payments over the life of your loan. Start by checking your credit report for errors, paying your bills on time, and reducing your overall debt.
Here are some general tips for raising your credit score, and keeping it in excellent shape:
Check your credit reports: Regularly review your credit reports from the three major credit bureaus (Equifax, Experian, and TransUnion) for errors or inaccuracies and dispute any incorrect information.
Make timely payments: Pay all your bills on time, as payment history is a significant factor in determining your credit score.
Reduce your credit utilization: Keep your credit card balances low compared to your credit limits, aiming for a credit utilization ratio below 30%.
Avoid applying for too much new credit: Each time you apply for new credit, a hard inquiry is added to your credit report, which can temporarily lower your score. Limit new credit applications and only apply when necessary. This is especially important in months leading up to buying a car.
Keep old credit accounts open: The length of your credit history affects your score, so keep your oldest accounts open, even if you’re not actively using them.
In conclusion, staying informed about the latest auto loan rates and understanding how they can vary based on factors such as credit score and loan term is crucial when shopping for a new or used car. By following these tips, staying on top of the latest market trends, and working to improve your credit score, you’ll be better positioned to secure the best auto loan rates available.
Ready to find the best auto loan rates for your needs? Compare offers from trusted credit unions with CarEdge Finance today. Our platform makes it easy to find competitive rates, ensuring that you get the best deal possible on your auto loan.
Ready for expert car buying help? Our team of auto industry pros is ready to help you negotiate the best deal with the lowest rate. Check out our services below.
The Environmental Protection Agency (EPA) unveiled its most stringent tailpipe pollution limits to date, a move that could significantly boost electric vehicle (EV) sales in the United States. These new emissions standards will apply to vehicles for the 2027-32 model years. The rules aim to decrease harmful pollutants from the transportation sector, the nation’s largest source of greenhouse gas emissions. In line with federal incentives and other investments, these new EPA rules are expected to accelerate the ongoing shift toward EVs.
10x Growth By 2032
According to EPA projections, by 2032, EVs could account for 67% of new light-duty vehicle sales and 46% of medium-duty vehicle sales. In 2022, electric vehicles made up 5.6% of new light-duty vehicle market share, and less than 1% of medium-duty vehicle sales. To achieve the EPA’s new goals, there will need to be 10x growth in EV market share in the United States.
A recent study looked at driving patterns among medium-duty truck operators and found that 65 percent of medium-duty and 49 percent of heavy-duty trucks are electrifiable today. Poor charging infrastructure and high prices remain the top hurdles still to be overcome for commercial EV adoption.
The proposed new EPA rules are anticipated to save consumers $12,000 over the lifetime of a light-duty vehicle, compared to a vehicle not subject to the new pollution limits. EPA Administrator Michael Regan emphasized that these ambitious standards are achievable.
New Proposed Emission Standards
The new standards would require carbon dioxide emissions averaging just 82 grams/mile across an automaker’s total vehicle production by model year 2032. That’s a 56% reduction from the 2026 target. The EPA would impose regulatory penalties on companies that do not move quickly enough toward cleaner vehicle production.
The new EPA regulations, if finalized, could support President Biden’s goal of having half of all new vehicles sold in the U.S. be zero-emission by 2030. This plan is essential for meeting U.S. commitments to reducing emissions. The U.S. aims to achieve 100% carbon pollution-free electricity by 2035, and attaining net-zero emissions economy-wide by 2050.
Greenhouse gas emissions from transportation account for about 27 percent of total U.S. greenhouse gas emissions. Transportation is the largest contributor of U.S. emissions. Although medium and heavy-duty trucks make up only 10 percent of the vehicles on the road, they produce 25 percent of all greenhouse gas emissions from transportation.
As electric vehicle adoption continues to grow, the automotive industry faces the challenge of accelerating electrification plans in response to these crucial regulatory changes.
In the ever-evolving landscape of the electric car market, Tesla has been known for frequently adjusting its prices. As we enter 2023, Tesla has already made its sixth price change, and this time it’s a price cut. This is quite the contrast from the past two years, where Tesla prices rose significantly. However, since late 2022, Tesla has been dropping prices by up to 25%. In this article, we’ll take a closer look at Tesla’s latest price adjustment and see just how much the prices have dropped this time around.
The Model 3 Receives Another Price Cut, But Long Range AWD Remains To Be Seen
Tesla has made another price adjustment to their popular Model 3, marking the sixth price change of 2023. This time, the Rear-Wheel Drive (RWD) Model 3 has dropped from $42,990 to $41,990, making the lowest-priced Tesla even more affordable. The Model 3 Long Range remains unavailable for the time being, while the Model 3 Performance has been reduced to $52,990. However, it is worth noting that Tesla now advertises that the RWD Model 3 will lose half of the EV tax credit due to new battery sourcing rules. The battery supplier for the LFP batteries, CATL, is almost certainly the reason for the Model 3 losing half of the credit.
Model Y Price Drops in 2023 – We’re Back to Where We Were
Tesla’s new 4680 Model Y is now on sale.
A brand new configuration is now available. The Standard Range AWD Model Y is now on the menu! The Standard Range Model Y is EPA-rated for 279 miles, and starts at $49,990. You can only order it in the 5-seater configuration. What makes the Standard Range Model Y so special? It is the first Tesla to include the new 4680 battery cells. These batteries are more energy dense, and are currently produced in Austin, Texas. The interior of the Standard Range Model Y is identical to the higher trim options.
The best-selling EV in America, the Model Y Long Range AWD, is back down to $52,990. In early 2023, Tesla had increased the price for this spec by $2,000, but has now eliminated that price hike. We’re back to where prices were several weeks ago.
The Model Y Performance received a price cut too, and is now down to $56,990.
The Model S sedan now starts at $84,990, a $5,000 cut from last month’s price. The Model S is rated for up to 396 miles of range. The Model S and X both feature the controversial yoke steering wheel.
Model X Price Drop
The Model X starts at $94,990, also a $5,000 drop. The Model X is rated for up to 333 miles of range. It’s the quickest SUV on the market (and third-row at that…), with a 0-60 mph time of just 2.5 seconds.
Tesla Prices as of Today
With and without the EV tax credit, here’s where Tesla prices stand after the latest price cuts.
Model 3 SR
Model 3 LR
Model 3 Perf.
Model Y SR
Model Y LR
Model Y Perf.
Current Price
$41,990
$48,990
$52,990
$49,990
$52,990
$56,990
Eligible Credit
$3,750
$7,500
$7,500
$7,500
$7,500
$7,500
Price With Tax Credit
$38,240
$41,490
$45,490
$42,490
$45,490
$49,490
Why Is Tesla Dropping Prices?
The automaker delivered 422,875 vehicles globally in the first quarter. That’s a record for Q1 for Tesla, but it shows a slowed pace of growth. With the economy on shaky ground, many drivers are cutting back on discretionary spending. Yes, that includes your favorite Tesla. Throw in new federal guidance on the EV tax credit, and it starts to look like Tesla had more reasons to drop prices than not to.
We’ll stay on top of the latest. Check out these other reader favorites:
Welcome to the ultimate electric car comparison for 2023, where we take a closer look at some of the best-selling EVs on the road. With the increasing popularity of electric cars, there are more options than ever before. We’ll compare the Tesla Model Y, Hyundai IONIQ 5, Kia EV6, Ford Mustang Mach-E, Volkswagen ID.4, and Tesla Model 3, analyzing their strengths and weaknesses in different categories. Whether you’re looking for the best value for your money, a family-friendly option, a budget-friendly choice, or the best car for road trips or performance, we’ve got you covered.
Tesla Model Y
First up, the best-selling EV in America. Is it all that it’s cracked up to be? As electric vehicles continue to gain popularity, competition in the EV market is heating up. One of the most well-known and well-regarded brands in this space is Tesla, which offers several models to choose from. But is the Model Y the best of the best? Let’s dive in.
Why It’s Awesome
The 2023 Tesla Model Y is an impressive electric crossover SUV that offers a range of up to 330 miles on a single charge, making it a great choice for those who need to travel long distances. It comes with a range of features that are sure to impress, including a large infotainment display, autopilot semi-autonomous driving system, and an all-glass roof that adds an airy ambiance to the cabin. The Model Y also offers impressive acceleration, making it a great choice for those who value speed and performance. It’s also incredibly safe.
Price and Range
The Long Range AWD Model Y starts at $52,990, while the Model Y Performance starts at $56,990. Tesla recently dropped its prices by up to 13%, making the Model Y more affordable than ever before. The entry-level ‘Standard Range AWD’ model comes with a different battery pack than the other two, and its range is lower at 279 miles per charge. It has finally appeared on Tesla’s online configurator with a price of $49,990.
The all-wheel-drive Long Range offers an impressive 330 miles of range, while the Performance model’s estimated range drops to 303 miles.
Performance
The Model Y is equipped with a dual-motor all-wheel drive setup that allows for impressive acceleration. The Long Range model can go from zero to 60 mph in just 4.4 seconds, while the Performance model can achieve this in an even quicker 3.6 seconds. While the Model Y offers impressive acceleration, it doesn’t deliver the same level of driving satisfaction as the Model 3 due to the SUV body’s higher center of gravity. On the other hand, road noise is reduced in the Model Y compared to its sedan sibling.
How It Compares
Compared to other EVs on the market, the Model Y offers a range of impressive features, including autopilot semi-autonomous driving and a large infotainment display. However, it doesn’t offer the same level of build quality as luxury EV SUVs like the Audi Q8 e-tron, the Cadillac Lyriq, and the Genesis GV60. Many reviewers note that even the IONIQ 5 and EV6 have a better ride quality.
Additionally, the Model Y can feel clumsy on twisty roads and offers less driving range than some rivals, such as the Ford Mustang Mach-E and the Volkswagen ID.4. However, the Model Y does have one key feature that sets it apart from other EVs on the market: an optional third row of seats, making it a great choice for family buyers with small children. It’s VERY tight back there, so don’t expect to fit adults in the third row.
Overall, the 2023 Tesla Model Y is a solid choice for those in the market for an electric crossover SUV. It offers impressive acceleration and a range of impressive features that are sure to impress, and its third row of seats makes it a great choice for families. However, it does face stiff competition from other EVs on the market, so it’s important to consider all options before making a final decision.
Hyundai IONIQ 5
The Hyundai IONIQ 5 is an electric SUV that combines modern electrification with a touch of retro design. This SUV is a standout performer in its category, thanks to its impressive fast-charging capabilities and notable driving range. With a range of power options, and a spread of pricing and range availability, the IONIQ 5 makes for a compelling choice for anyone considering their first EV purchase.
Why It’s Awesome
The IONIQ 5 is Hyundai’s all-electric SUV that features a head-turning design with a digitized dashboard and eco-friendly materials. It offers quick charging times, ample passenger and cargo space, and modern infotainment and connectivity features. The IONIQ 5 boasts a 350-kW DC fast-charging capacity, which allows it to charge as quickly as far more expensive and luxurious EVs, like the Porsche Taycan and Lucid Air. Inside, the IONIQ 5’s cabin features a flat floor, allowing for more room for passengers and cargo.
Price and Range
The 2023 Hyundai IONIQ 5 starts at $41,450 for the SE RWD Standard Range, which can run for 220 miles on a single charge. But that’s not the best value. The SE rear-wheel drive with more power and a bigger battery starts at $45,500, and is good for an EPA-rated 303 miles on a charge. The SEL version, which comes highly recommended, is priced from $47,450. The top-of-the-line Limited trim comes in at $52,600, and featured a glass roof, heads-up display, 20” wheels, and other premium features.
All-wheel drive adds a second electric motor, creating more combined power and costs $3,500 extra. The IONIQ 5 has a range of up to 303 miles with a single motor and 266 miles with all-wheel drive. That’s a minor increase from the 2022 model.
Performance
The standard-range battery paired with a single, rear-mounted electric motor generates 168 horsepower. The longer-range battery generates 225 horsepower and 258 pound-feet of torque, which propels the IONIQ 5 to 60 mph in 7.4 seconds with rear-wheel drive. The all-wheel-drive version is much more powerful, with 320 horsepower and 446 pound-feet, and goes from 0 to 60 mph in just 4.5 seconds, according to testing from Car and Driver and others.
How It Compares
The IONIQ 5 compares favorably to other popular EV SUVs, such as the Ford Mustang Mach-E and Volkswagen ID.4. It boasts better charging speeds and a longer range than most competitors in its class, as well as a more spacious interior. The IONIQ 5’s starting price is also competitive, especially considering its impressive performance and features. Sadly, dealer markups have plagued the IONIQ 5 from the start. Hopefully, 2023 will see the demise of these anti-consumer markups. Overall, the IONIQ 5 is a great choice for anyone looking for a stylish and capable electric SUV.
Kia EV6
The Kia EV6 is a standout electric SUV that is turning heads in the EV market. The EV6 boasts a bold look all its own and athletic road manners that make it a joy to drive.
Why It’s Awesome
The EV6 is an SUV that’s easy to live with, fun-to-drive, and a good value. It’s one of our favorite EVs because its traits add up to a well-rounded electric vehicle. The interior is spacious and quiet, making it a comfortable ride for passengers. Plus, the EV6 has excellent acceleration and handling, particularly for an SUV. For hot-shoe drivers, the GT model is the one to get, with its impressive 576 horsepower that’s enough to make Stinger owners envious as it blows by them.
Price and Range
The Kia EV6 is costlier than nearly all other non-luxury electric SUVs, with a base price of $48,700. That’s for the base Wind trim with rear-wheel drive. The midrange EV6 GT-Line with RWD starts at $52,900. All-wheel-drive versions of the Wind and GT-Line start at $52,900 and $57,600, respectively. The new EV6 GT is more expensive but more capable, starting at $61,600. The EV6 offers two battery sizes: a 58.0-kWh and a 77.4-kWh pack. The smaller, standard battery has an EPA-rated range of 232 miles, while the larger, long-range battery is EPA-rated at up to 310 miles. Opt for the performance-oriented GT model, and the range drops to a measly 206 miles per charge, even though it comes with the larger of the two batteries.
Performance
The EV6 is available with a single electric motor mounted on the rear axle that gives it rear-wheel drive or with electric motors on both front and rear that enable all-wheel drive. While all-wheel-drive models have a larger battery pack and either 320 or 576 total horsepower, the base rear-drive example has a smaller battery and just 167 horses. Opting for the bigger battery boosts the rear-drive EV6’s total system output to 225 horses. We drove a GT-Line AWD in Europe and enjoyed its satisfying acceleration, agile handling, and adjustable regenerative brake settings. At our test track, that 320-hp GT-Line model managed a brisk 4.5-second zero-to-60-mph time. If you prioritize maximum straight-line performance, the 576-hp GT has you covered; in our testing, it hit 60 mph in 3.2 seconds.
How It Compares
The EV6 is a strong contender in the EV market and is a direct competitor to the Tesla Model Y and Hyundai Ioniq 5. In terms of price, the EV6 is pricier than the Ioniq 5 but more affordable than the Model Y. While the Model Y has a longer range, the EV6 offers a respectable range and competitive performance. The Ioniq 5 has a similar range and performance to the EV6, but the EV6’s styling and features give it a unique edge. Ultimately, choosing between these three cars will come down to personal preferences, but the EV6 is a strong option that should not be overlooked.
Ford Mustang Mach-E
2023 Ford Mustang Mach-E interior
The 2023 Ford Mustang Mach-E is a highly versatile electric crossover that has made a name for itself in the EV market. It offers a range of equipment packages to suit different customer preferences and lifestyles, ranging from the content-rich Premium model to the performance-oriented GT. The Mach-E is agile, quick, and boasts an appealing exterior, an upscale interior with the latest tech, and impressive range and capability.
Why It’s Awesome
The Mustang Mach-E’s design is sleek, modern, and sporty, with its elongated hood, sweeping roofline, and signature pony badge on the front. The interior is also impressive, with a streamlined dashboard, customizable ambient interior lighting, and a huge vertically mounted touchscreen for infotainment. The Mach-E’s battery is located under the floor, which maximizes passenger and cargo space, and the front trunk is made of durable plastics that can be rinsed and drained. The Mach-E also has an array of features such as heated front seats, a heated steering wheel, and wireless charging.
Price and Range
The 2023 Ford Mustang Mach-E’s pricing starts at $45,995 for the rear-drive Select model, and the GT Extended Range model is priced at $63,575+. The Premium model’s estimated range has been increased to 290 miles, while the Mach-E’s range varies between 224 and 312 miles, depending on the battery pack and the configuration of electric motors. Although it isn’t as impressive as some of the longest-range Tesla models, the Mach-E’s fast-charging capability and mobile charging device make up for it.
Performance
The 2023 Mustang Mach-E is available with either a standard-range 70.0-kWh battery or an extended-range 91.0-kWh pack. The electric motor is mounted on the rear or both axles, creating either rear-wheel or all-wheel drive, respectively. The GT and GT Performance models have motors that combine to produce 480 horsepower and up to 634 pound-feet of torque, which can propel the Mach-E GT Performance from zero to 60 mph in just 3.5 seconds. Other models have between 266 and 346 horsepower and 317 to 428 pound-feet of torque.
How It Compares
The Mustang Mach-E is a highly competitive EV that has won awards for its impressive performance and design. However, it has since lost the title of EV of the Year to the cheaper and similarly impressive Hyundai Ioniq 5. The Mach-E’s range and performance are impressive, but its price point may be a drawback for some buyers. Overall, the Mach-E offers a lot of features, range, and capability that make it a worthy contender in the EV market.
Volkswagen ID.4
The 2023 Volkswagen ID.4 is the German automaker’s answer to the electric SUV craze that has taken the world by storm. Designed to provide an affordable and practical option for those looking to switch from internal combustion, the ID.4 boasts an impressive driving range, fast charging capabilities, and a comfortable, spacious cabin. While it faces stiff competition from established players like the Tesla Model Y and the Ford Mustang Mach-E, the ID.4 holds its own with its attractive pricing and a well-rounded package that blends practicality with comfort.
Why It’s Awesome
The Volkswagen ID.4 is an excellent electric SUV that pairs practicality with comfort, making it a great choice for drivers looking to make the switch from internal combustion. It comes standard with DC fast-charging capability, allowing for relatively quick and easy charging at public stations. The ID.4 also boasts a spacious interior with high-tech features, ambient lighting, and generous cargo space, making it a practical choice for families or those who require extra storage.
Price and Range
With a starting MSRP of $37,495 for the Standard trim and $42,495 for the S trim, the Volkswagen ID.4 is an affordable electric SUV that won’t break the bank. However, the base Standard trim pairs its attractive price tag with a smaller 58-kWh battery and only around 208 miles of range, which may not be sufficient for some drivers. In contrast, the all-wheel-drive Pro S Plus model, which starts at $50,195, comes with the larger 82-kWh battery and a maximum range of about 275 miles per charge.
Performance
The ID.4 comes with a single rear-mounted motor that produces 201 horsepower, but drivers can opt for the all-wheel-drive model, which comes with a second motor and ups power output to 295 horsepower. However, the ID.4’s driving demeanor was found to be less playful than its competitors, and its traditional gut-punch acceleration was also lacking, even in its most aggressive regenerative mode.
How It Compares
In comparison to the Tesla Model Y and the Hyundai IONIQ 5, the Volkswagen ID.4 falls short in terms of maximum range and performance. The Model Y offers an EPA estimated range of 330 miles, significantly more than the ID.4’s maximum range of about 275 miles. The IONIQ 5 offers slightly more horsepower than the ID.4, with a maximum power output of 305 horsepower. Additionally, the ID.4’s driving demeanor was found to be less playful than both the Model Y and the IONIQ 5, making it less enjoyable to drive. However, the ID.4’s lower starting price and practicality make it a solid choice for drivers looking for an affordable electric SUV with plenty of space and features.
Tesla Model 3
The Tesla Model 3 revolutionized the electric vehicle market with its compelling combination of affordability, performance, and long-range driving capability. Even as competition from newcomers like the Hyundai Ioniq 6 and the Polestar 2 has grown, the Model 3 remains a bestseller thanks to its unique features.
Why It’s Awesome
Tesla’s Model 3 electric sedan is incredibly fun to drive, and its low center of gravity gives it excellent handling on the road. It accelerates quickly and smoothly thanks to its powerful electric motor, which delivers a punchy response right from the start. The Model 3 Long Range edition provides an impressive 358 miles of range, while the Performance trim delivers extra power and a sportier appearance.
Price and Range
The 2023 Tesla Model 3 is priced at $41,990 for the base rear-wheel-drive model with an estimated range of 272 miles. The Long Range and Performance trims both offer longer ranges of 358 and 315 miles, respectively, with the Performance model coming in at just under $52,990. Buyers can add Full Self-Driving Capability for an additional $15K.
Performance
The Model 3’s electric motor provides instant torque, allowing it to go from 0 to 60 mph in 5.1 seconds in the Long Range model and an impressive 3.5 seconds in the Performance edition. The Model 3 is known for its low center of gravity, resulting in excellent handling and a smooth ride. The steering is precise, and the Model 3 feels planted and stable in corners. Road noise is noticeable inside the cabin, but it’s a minor issue.
How It Compares
The Model 3 remains a top contender in the EV market, thanks to its performance, range, and overall appeal. The build quality has been a concern, with some reports of inconsistent assembly and questionable durability. Still, the Model 3’s range, power, and handling set it apart from the competition. Its interior is unlike any other car on the market, with almost everything controlled by a touchscreen in the center of the dashboard. The Model 3’s driver-assist system is impressive, but its name, Autopilot, is misleading. It’s a driver-assist system, not a self-driving feature.
Overall, the Tesla Model 3 is an excellent electric sedan and remains a bestseller for good reason. Its combination of range, performance, and fun driving make it a top choice for many EV buyers.
The Best of the Best
Best value for money
Tesla Model 3: With a starting price of $42,990 and a maximum range of 358 miles, the Model 3 offers impressive value for money, along with strong performance and smooth driving experience.
Best for families
Hyundai IONIQ 5: The IONIQ 5 boasts a spacious and versatile interior with ample room for passengers and cargo, making it an excellent choice for families. It also has a range of up to 300 miles, ensuring long-distance trips are possible without frequent recharging.
Best for fast charging
Kia EV6: The EV6 offers super-fast charging, with up to 210 miles of range added in just 18 minutes. This makes it ideal for drivers who frequently make long-distance trips and don’t want to spend a lot of time at charging stations.
Best on a budget
Volkswagen ID.4: The ID.4 has a starting price of $39,995, making it an affordable option for those looking to switch to an electric vehicle. Despite its budget-friendly price tag, it offers a comfortable ride, good handling, and a range of up to 250 miles.
Best for road trips
Tesla Model Y: The Model Y boasts a range of up to 326 miles and Tesla’s extensive Supercharger network, making it an excellent choice for road trips. It also has a spacious interior and plenty of cargo space, making long drives comfortable and convenient.
Best for performance
Mustang Mach-E GT: The Mustang Mach-E GT delivers thrilling performance with its 480 horsepower electric motor, which can accelerate from 0 to 60 mph in just 3.5 seconds. It also has a sporty design and a range of up to 270 miles, making it a great choice for those who want an electric vehicle with an edge.
No Losers In This Competition
In conclusion, this electric car comparison has highlighted some of the top-performing and most popular electric vehicles on the market in 2023. Each of these models has its own unique strengths and weaknesses, making them suitable for different lifestyles and driving needs. Whether you prioritize performance, range, value for money, or family-friendliness, there is an EV on this list for you. As more manufacturers enter the EV market, we can expect to see even more innovation and competition, leading to even better options for drivers.
The U.S. Treasury Department has announced new electric vehicle tax credit sourcing rules that will take effect in April, aiming to incentivize domestic production and reduce reliance on foreign supply chains. The new rules will remove full eligibility for several popular EVs. These amendments come months after the IRS issued preliminary EV tax credit rules. Here’s the latest from the federal government.
New EV Tax Credit Guidance
Starting April 18th, the $7,500 tax credit for new EVs will be split into two parts for qualifying vehicles and buyers. The new rules include:
Half of the credit will be based on meeting escalating requirements for battery components to come from North America.
The other half will be based on critical minerals coming from the U.S. or its free-trade partners.
By 2027, 80% of the value of a battery’s critical minerals will need to be extracted or processed in the U.S. or a country with a free-trade agreement in effect.
By 2029, 100% of the value of battery components will need to be made or assembled in North America.
A three-step process for determining the percentage of the value of the critical minerals in a battery.
A four-step process for determining the value of the battery components manufactured or assembled in North America.
Criteria identifying which nations that produce critical minerals have free-trade agreements with the U.S.
Starting in 2024, vehicles are ineligible if they contain any battery components manufactured by a “foreign entity of concern,” which could include companies controlled by China. That exclusion starts in 2025 for critical minerals.
Newly negotiated critical mineral agreements, such as the U.S.-Japan trade deal on EV battery minerals, will qualify. Other qualifying countries include Australia, Canada, Chile, Korea, and Mexico. This is huge news for fans of Hyundai and Kia EVs. The European Union is also in negotiations with the U.S. on a battery critical minerals deal.
How Battery and Mineral Sourcing Is Determined
Here’s a look at the proposed three-step process for determining the percentage of the value of the critical minerals in a battery that contribute toward meeting critical minerals requirement: 1) determine procurement chains, 2) identify qualifying critical minerals, and 3) calculate qualifying critical mineral content.
The U.S Treasury department also proposes a four-step process for determining the value and sourcing of batteries: 1) identify battery components that are manufactured or assembled in North America, 2) determine the incremental value of each battery component, including North American battery components, 3) determine the total incremental value of battery components, and 4) calculate the qualifying battery component content by dividing the total incremental value of North American battery components by the total incremental value of all battery components. Sound complicated? What else would you expect from government guidance. Check out the official press release here.
Eligible Vehicles List
Starting April 18, 2023, new electric vehicles placed in service will need to adhere to the critical mineral and battery component requirements specified in the U.S. Treasury Department’s rule. To assist buyers, FuelEconomy.gov will provide a comprehensive list of eligible clean vehicles on that date. This list, submitted by qualified manufacturers to the IRS, will detail the vehicles meeting the new clean vehicle credit requirements, including the exact amount of the credit they are eligible for.
While the new EV tax credit sourcing rules aim to promote domestic EV supply chains and job creation, China still dominates the processing and refining of key battery minerals. The U.S. is working to build secure supply chains for critical minerals and focusing on domestic sourcing and production. However, EV incentives could be eliminated, at least partially, for several popular electric vehicles. Check back for the updated eligible vehicles list once it is made public on April 18, 2023.
CarEdge Insights
