VW ID.4 qualifies for US tax credit
Volkswagen’s ID.4 is the only foreign manufacturer so far to make it onto the new list of electric models eligible for the full US$7,500 tax credit in the United States.
When the US Treasury Department published the list of eligible models for registrations from 18 April a few days ago, VW was not yet included. That has now changed and all variants of the VW ID.4 assembled in the USA (model year 2023) are now eligible for the full $7,500 federal subsidy. The background is that Volkswagen assembles the model in the USA – specifically in Tennessee – and has invested “even more in battery production, components and innovations” there, according to the original statement in an accompanying press release. Specifically, the manufacturer is talking about an $800 million investment in local assembly and sourcing.
In the first quarter of 2023, the ID.4 was the fourth best-selling electric vehicle in the US market, according to company data. And: “The changes made for US assembly have made the vehicle even more attractive to the American public,” the Wolfsburg-based company states. The 2023 ID.4 is available with two battery sizes and two powertrains and comes to a starting price of $38,995 in the US before incentives.
“This is great news for consumers in the US as it expands the choice of truly affordable electric vehicles,” said Pablo Di Si, president and CEO of Volkswagen Group of America, commenting on the list placement. “The ID.4 is already one of the lowest-priced electric SUVs on the market, and the $7,500 Federal Tax Credit makes it even more attainable. This shows that we made the right decision to localize production of the ID.4 in Tennessee and invest even further in battery production, components and innovation. Every ID.4 sold supports thousands of American jobs and helps advance our goal of a carbon-neutral future.”
The background to the new incentive list, updated by the US Treasury Department on 18 April, is the new regulation released just over a fortnight ago that electric cars in the US must meet to qualify for tax incentives of up to $7,500 under the Inflation Reduction Act (IRA). Electric and plug-in hybrid models from BMW, Nissan, Rivian, Hyundai and Volvo Cars have since dropped out of the incentives completely. As things stand, only BEV and PHEV models from Cadillac, Chevrolet, Chrysler, Ford, Jeep, Lincoln and Tesla are eligible for the tax credits. At Tesla, with the exception of the Model 3 Standard Range Rear Wheel Drive ($3,750), all other variants of the Model 3 and Model Y qualify for the full $7,500 tax credit. Volkswagen is now the first foreign manufacturer to also offer an eligible model.
The regulations make battery material origin an elementary criterion for funding and are thus intended to make the United States less dependent on China in the supply chains for electric cars. They are part of US President Joe Biden’s efforts to switch half of US new car sales to electric cars or PHEVs by 2030