Tax credits for electric vehicles: what you need to know before car shopping
PHOENIX (3TV/CBS 5) — Electric vehicles are becoming more and more common. Federal tax credits can make them a pretty attractive option. But not every EV qualifies for the credit, so there’s a lot for you to consider.
The new tax credit rules just went into place last month, and things keep changing as cars get added or removed from the eligibility list. “Everything’s sort of in flux,” said Keith Barry from Consumer Reports. He tells On Your Side that the credits are persuading consumers to go electric. Under the new rules, to get full credit, the MSRP has to be under $55,000 for a car and under $80,000 for a van, SUV, or truck.
It matters where the battery components come from. “The auto industry is huge and slow-moving, and they’re trying to figure out what they need to do in order to ensure that the vehicles they’re making qualify for these credits,” Barry said. It’s complicated. The Tesla Model 3 “Performance” car qualifies for the full $7,500, but the rear-wheel drive version only gets $3,7000 in credit because the battery components come from China.
While Tesla may be the first electric car you think of, there are much cheaper options available. “The Chevy Bolt, that’s a very inexpensive vehicle,” Barry said. “You can get it for just under $20,000 with a tax credit, and you know, destination fees and everything else. Getting any new car for under $20,000 is a big deal, let alone an electric car.”
As electric cars become more widespread, they’re turning up in the used car market. Like any used car, that comes with risk. “So you’re going to want to do your due diligence, and it’s a little harder. Because you know, taking a vehicle to a mechanic to get it inspected is a little bit different for an electric car versus a gas-powered car,” Barry said. “You’re going to find fewer people are going to be comfortable with that.”
The biggest concern is whether you’ll have to replace the battery in a preowned EV, which is a huge expense. The batteries are typically covered for 100,000 miles, so finding a car with low mileage is key. Just how much it costs to replace the battery depends on the model. A Toyota Prius can be about $2,700 dollars, but some Tesla models will cost more like $20,000.
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