Ford Motor and Stellantis, two major automakers in the United States, have announced that most of their electric and plug-in electric hybrid models will see tax credits halved to $3,750 from April 18th onwards, following new U.S. Treasury rules that were unveiled on Friday. The rules were mandated by Congress as part of a $430 billion climate bill in August 2022, and are aimed at reducing China’s dominance in global supply chains of products like EV batteries and solar panels, as well as encouraging the production of these products in the U.S.
“China dominates the global supply chains of products like EV batteries and solar panels, and we need to ensure that the U.S. is not reliant on one country for critical components,” said Senator Chuck Schumer, who helped lead the climate bill.
Out of the six Ford vehicles, only the F-150 Lightning pickup truck and Lincoln Aviator Grand Touring will still be eligible for a $7,500 credit. The other models currently receiving credits, including the Ford Mustang Mach-E, Ford E-Transit, Ford Escape Plug-In Hybrid, and Lincoln Corsair Grand Touring, will see credits drop to $3,750. Similarly, Stellantis has announced that only one of its three plug-in hybrid electric models, the Chrysler Pacifica plug-in electric hybrid, will qualify for the higher $7,500 tax credit after April 18th.
“We will make sure our products are able to use those subsidies,” said Stellantis CEO Carlos Tavares in a statement to reporters on the sidelines of the New York Auto Show. “The credits are a major driver for the industry because it impacts the affordability.”
The stricter EV battery sourcing guidance issued on Friday triggers new requirements for critical minerals and battery components. While the move is expected to help domestic battery manufacturing, it could also make it more challenging for automakers to meet the standards.
Despite this, automakers remain committed to the EV industry. Ford, for example, has said it expects its electric-vehicle business unit to lose $3 billion this year, but will remain on track for a pretax margin of 8% by late 2026. Sales of Ford’s electric vehicles jumped 41% in the first quarter of 2023, according to recent data.
In the words of Senator Schumer, “we need to continue investing in electric vehicles and other clean energy technologies if we want to tackle the climate crisis and create good-paying jobs here in America.”
