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The Street

Samanda Dorger

A List of EVs and Hybrids That Currently Qualify for Federal Tax Credits

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Electric cars seem like they could save drivers a lot of money, but they’re not affordable for most people.

EVs were about one-third more expensive than other vehicles between 2020 and 2022, according to experts at the the Chicago Fed’s 2023 Automotive Insights Symposium. Considering the total cost of ownership, including financing, maintenance, fuel and insurance, EVs can be cheaper than gas cars after about seven years, they said.

Prices are trending downward a bit. The average price paid for a new non-luxury vehicle in February 2023 was $44,697, down from a peak of almost $49,000, while the average new EV sold for $58,385, down from around $65,000, according to Kelley Blue Book estimates. The drop in EV pricing was driven by significant price cuts from Tesla (TSLA), which commands roughly two-thirds of the EV market, KBB reports.

But financing has gotten expensive with higher interest rates -- the average car payment in January, KBB said, was a whopping $780 a month. That’s a lot for the median U.S. household income of around $70,784.

A $7,500 tax credit can make a big dent in the price of a car.

When Congress passed the the Inflation Reduction Act last year, it made big changes to the incentives for electric, hybrid and plug-in hybrid vehicles. Now called the Clean Vehicle Credit, it added a new requirement for vehicle assembly in North America. It also now includes income thresholds for buyers and price caps on the vehicles purchased.

As a result, there was a big confusing shuffle in the past few months as to which EVs qualified for tax credits and which buyers could get the credit. Automakers are switching to U.S. factories to manufacture more EVs and their batteries to fulfill the North America requirement, while mining companies are racing to expand lithium production for those batteries, according to the New York Times.

The bottom line is that the U.S. Dept. of Energy now lists the qualifying vehicles and their tax credits and price caps.

The income limits include a modified adjusted gross income of $150,000 for a single filer or $300,000 for married filing jointly, according to this explainer from NerdWallet, which details some of the finer points of the Clean Vehicle Credit.

A useful new change to the law is that you can get the tax credit applied as a discount at the point of sale, instead of having to front the money and wait until you file taxes to get your $7,500 back.

Because of the new law, there are a lot of cars out there that don't (yet) qualify, and several that only qualify for a partial tax credit. Here are all the vehicles that currently qualify for federal tax incentives, plus price caps and starting prices, according to the U.S. Dept. of Energy.