Volkswagen’s ID.4 now qualifies for the full $7,500 federal subsidy for electric vehicles in the United States, becoming the first foreign manufacturer to make it onto the list of eligible models. The US Treasury Department updated its list of eligible models on April 18, and VW was not initially included. However, the German automaker’s investment of $800 million in local assembly and sourcing in Tennessee paid off, and now all variants of the VW ID.4 assembled in the USA (model year 2023) are eligible for the full federal tax credit.
The ID.4 was already the fourth best-selling electric vehicle in the US market in Q1 2023, according to company data, and the latest development is expected to make it even more attractive to the American public. The car is available with two battery sizes and two powertrains, with a starting price of $38,995 in the US before incentives.
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Volkswagen’s decision to localize the production of the ID.4 in Tennessee and invest even more in battery production, components, and innovation has paid off. The move has also created thousands of American jobs and supports the company’s goal of a carbon-neutral future.
The US Treasury Department’s updated list of eligible models for the federal tax credit is part of US President Joe Biden’s efforts to switch half of US new car sales to electric cars or plug-in hybrid electric vehicles by 2030. The new regulation requires electric vehicles in the US to meet certain criteria to qualify for tax incentives of up to $7,500 under the Inflation Reduction Act. The regulations also make battery material origin an essential criterion for funding to make the US less dependent on China in the supply chains for electric cars.
See also: Volkswagen’s US Electric Vehicle Sales Surge in Q1 2023, Driven by Impressive ID.4 Growth
The ID.4’s eligibility for the full federal tax credit is great news for American consumers as it expands the choice of affordable electric vehicles. It shows that Volkswagen made the right decision to invest in local assembly and sourcing, and it sets a precedent for other foreign automakers to follow suit. With the ID.4 leading the way, the future of electric vehicles in the US looks bright.
