US EV Tax Credit Slashes Eligible Vehicles by 37%, Shifting Focus to Domestic Brands

The U.S. electric vehicle (EV) tax credit system has seen significant cuts, with the number of vehicles eligible for the benefit dropping substantially.

This shift comes amid threats from President-elect Donald Trump to reduce or eliminate the system if he were re-elected.

According to the U.S. Environmental Protection Agency (EPA), the number of vehicles eligible for the EV tax credit has decreased by 37.5%, from 40 last year to 25 this year. This reduction is due to the Foreign Interest Organization (FEOC) rule under the Inflation Reduction Act (IRA), which took effect this year.

This is because the IRA’s detailed provisions on eco-friendly vehicle tax credits prohibit subsidies for EVs equipped with batteries using key minerals produced by FEOC from 2025.

Along with the reduction in eligible vehicle models, the number of complete vehicle groups and brands receiving benefits has also declined. Last year, 8 groups and 11 brands were included in the list, but this year, the number has dropped to 6 groups and 10 brands.

In particular, the German Volkswagen Group received subsidies for 10 models, including Volkswagen and Audi, last year but was excluded from all of them this year.

All 7 American EV brand Rivian models were also removed from the list, and Nissan excluded 1 model.

On the other hand, Hyundai Motor Group is the only automaker to be newly added to the list amid these changes. Five new models were added, including Hyundai’s Ioniq 5 and Ioniq 9, Kia’s EV6 and EV9, and Genesis’ GV70. These models meet the IRA’s battery and core mineral requirements and will receive a subsidy of $7,500.

Hyundai Motor Group’s success is primarily attributed to the production of EVs at the Hyundai Motor Group Metaplant America (HMGMA) and Kia’s Georgia plant, which have been in operation since late last year.

South Korean battery companies and vehicle models that will benefit from these regulatory changes include LG Energy Solution, with 8 models (including 2 Cadillac and 3 Chevrolet vehicles), and SK On, with 8 models (including 3 Ford models and 2 Hyundai and Kia vehicles each).

This regulatory shift indicates that the U.S. prioritizes domestic companies in its EV industry policy, which is expected to impact the global automobile market’s competitive landscape significantly.