As the calendar flipped to 2024, many Americans dreaming of an EV purchase woke up to a harsh reality: the EVs of their dreams lost federal tax credit. Gone are the days when a wide range of electric vehicles enjoyed the sweet $7,500 discount at checkout. In its place, stricter rules have left a growing list of popular models ineligible for the coveted credit.

EVs That Lost Federal Tax Credit

Gone from the party are some household names in the EV world. The ever-popular Nissan Leaf, a pioneer in affordable EVs, is now left out in the cold due to its battery sourcing. The Ford Mustang Mach-E, lauded for its sporty style and practicality, also falls short of the new criteria. Even Tesla, the undisputed EV king, isn’t immune. The base Model 3 and the Long Range variant wave goodbye to the full credit, leaving only pricier configurations still in the game.

Why They Lost Federal Tax Credit

But why the sudden change? The Inflation Reduction Act of 2022 ushered in a new era of EV tax credits with two key goals: boosting domestic manufacturing and battery sourcing and making the incentive more targeted. To achieve these ends, the act introduced stringent requirements for vehicles to qualify.

Firstly, EVs must roll off the assembly line in North America. This effectively disqualifies models built overseas, even if they boast impressive specs. Secondly, the critical minerals and battery components within an EV must also have a significant portion sourced from North America or a free-trade partner. This aims to reduce dependence on countries like China and incentivize domestic battery production.

So, what does this mean for potential EV buyers? Well, it’s time to buckle down and do some research. Many previously attractive options no longer offer the same financial cushion. However, hope is not lost. Several models still make the cut, including the Chevrolet Bolt EV and EUV, the Chrysler Pacifica Hybrid, and the Tesla Model Y (in certain configurations). Additionally, manufacturers are scrambling to adjust their supply chains and production to comply with the new rules. Some previously ineligible models, like the Ford F-150 Lightning and Rivian R1T, may regain eligibility later in the year as battery-sourcing strategies shift.


The tax credit shakeup serves as a reminder that the EV market is in flux. While the incentive landscape may have narrowed, the long-term benefits of electric vehicles remain undeniable. Lower emissions, quieter rides, and reduced dependence on fossil fuels are still compelling reasons to make the switch. And who knows, with continued technological advancements and policy refinements, the tax credit may yet return in an even stronger form, paving the way for a smoother transition to an electric future.

Get a FREE EV charger installation quote from Peak!