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Should you buy an electric vehicle now or wait till January?

Buyers confused by new credits coming in the new year
Automakers-EV Credit-Congress
Posted at 5:00 AM, Aug 26, 2022
and last updated 2022-08-26 07:19:12-04

The recently signed "Inflation Reduction Act" is stirring up new interest in electric vehicles, with recent tax credits for both new and used EVs starting next year.

But does that mean you should wait until January to buy?

It's confusing because some vehicles that currently get the credit may no longer receive them after the first of the year.

Marketing director Kevin Frye of the Jeff Wyler Automotive Family has his hands full these days, trying to help buyers at his group of dealerships sort out the new credits.

EVs that lost their credits may have them again.

Frye hopes the new law brings in new buyers now that manufacturers will no longer be limited to selling less than 200,000 vehicles to give a tax break.

"There will no longer be a limit on the number of EV credits manufacturers get," Frye said, "so manufacturers like Tesla, Toyota, are going to have no problem from that point."

He explained that Tesla and Toyota's Prius had used up their credits.

But buyers will be happy to know that those credits will restart in January, as will credits for GM's Chevy Bolt.

And the numbers are generous if your car qualifies.

Starting next year, you can get up to a $7,500 credit for many new EVs.

For some used vehicles, you'll get up to a $4,000 credit for the first time.

Some vehicles won't qualify anymore

So far, so good.

But the problem is a complicated new law: Some EVs that qualify for a tax break this year may no longer allow after January 1st.

That's because:

  • EVs must be assembled in North America to qualify (many are not).
  • Car buyers have to meet income guidelines.
  • Only vehicles below a specific price will be eligible.

Karl Brauer with the auto deal site iSeeCars.com also worries some manufacturers may use the credits as a reason to raise prices.

"Any justification they can get to raise the price, such as a $7,500 to be offset by raising the price by around that same amount some are taking, because it's hard to be profitable on these vehicles," he said.

He also says there are insufficiently used vehicles to keep up with demand.

"Remember, there's only so many used EVs, "he said, "and they're going up in price already without that credit."

He says if you have the cash, this fall may be the time to buy when you can still get tax credits on EVs assembled outside the US.

However, the law is not finalized and could change by January, allowing more cars to get the credit.

Still confused?

The website Electrek lists which cars will qualify and won't qualify for tax credits.

Kevin Frye, meantime, says to talk to a local dealer, like his Mercedes dealership, that has salespeople who specialize in EVs.

"They communicate directly with the manufacturer to let you know which car qualifies and which credit is best for you.

That way, you don't waste your money.

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