Ford and General Motors have announced price increases for their electric vehicles, essentially offsetting the electric vehicle tax credits contained in Democrats’ “Inflation Reduction Act.”
The price hikes effectively negate the potential tax benefit of buying one of the manufacturers’ new electric vehicles, The Daily Wire reports:
“Citing ‘significant material cost increases and other factors,’ Ford’s announcement revealed price hikes between $6,000 and $8,500 for its electric vehicles. The F-150 Lightning Pro, for example, will sell for $46,974 — a $7,000 increase from the $39,947 charged for last year’s model. GM likewise increased the cost of its electric Hummer by $6,250 last month.
“The price hikes are comparable to the $7,500 tax credits for new electric vehicles included in the $740 billion Inflation Reduction Act, which currently awaits President Joe Biden’s signature.”
Additionally, as Kiplinger notes, higher prices of electric vehicles make them less likely to qualify for the tax credits:
“Vehicle price and type also matter. Vans, pickup trucks, and SUVs with a manufacture’s retail suggested price (MSRP) of more than $80,000, won’t qualify for the credit. For clean cars to qualify for the EV tax credit, the MSRP can’t be more than $55,000.”
The average price for a new electric vehicle is more than $65,000 and “well above the industry average and more aligned with luxury prices than mainstream prices,” according to Kelly Blue Book. In July, the average price was up 18.8% from the same month last year.
What’s more, the Inflation Reduction Act makes up to 70 percent of electric and plug-in hybrid vehicles that currently qualify ineligible for tax credits, according to Reuters:
“The Alliance for Automotive Innovation, a trade group representing Volkswagen (VOWG_p.DE), General Motors Co (GM.N), Toyota Motor (7203.T) and Ford Motor (F.N) among others, said earlier the law would make 70% of 72 U.S. electric, plug-in hybrid and fuel-cell EVs that currently qualify ineligible upon Biden's signing.
“On Jan. 1, when the bill's new income and price caps and battery and critical mineral sourcing rules take effect, ‘none would qualify for the full credit when additional sourcing requirements go into effect,’ the group added.”
Only electric vehicles assembled in North America qualify for the tax credits and there are income limits for obtaining the tax benefit, further reducing the incentive to buy for some consumers.