Consider These Cars Before EV Tax Credit Changes in 2023
The tax credit offered by the federal government for electric vehicles has been overhauled and is set to change even more next year.
If you’re thinking about buying a new electric vehicle, sooner may be better. Or at least simpler. The clean vehicle credit program outlined in the Inflation Reduction Act changed the rules around the federal EV tax credit and will change them even more at the start of the new year. EVs whose final assembly is outside North America were made ineligible the day the law was passed, and starting in 2023 models over a certain price ($55,000 for cars and $80,000 for trucks and SUVs) will no longer qualify for the incentive. January 1, 2023 the law phases in requirements regarding where a qualifying vehicle’s battery components are manufactured or assembled, and where the minerals were extracted or processed from. Things are about to get a lot more complicated, and even the IRS hasn’t finalized rules yet — they have until Dec. 31, 2022 — so if you’re planning to get an EV before the new year you can take advantage of the EV tax credit in its current form with relatively straightforward eligibility criteria.
Take a look at a few of the great EVs that are currently eligible. Remember, in order to avoid the battery component and mineral requirements, you have to purchase (not lease) a vehicle and take possession before the end of the year to qualify to claim the credit.
2022 Audi Q5
It may wear distinctly Teutonic styling, but the Audi Q5 is actually built near Puebla, Mexico. To find one that qualifies for the EV tax credits, you’ll need to hone in on what Audi calls the 55 TFSI e quattro as it meets the North American final assembly requirement. Behind that clunky name sits a plug-in hybrid powertrain consisting of a 2.0-liter four-cylinder gas engine paired with an electric motor and a battery good for 362 hp and as much as 23 miles of all-electric range on a full charge. A qualifying Q5 55 TFSI e quattro starts at about $55,500. Incidentally, that makes the Q5 55 TFSI e quattro slightly cheaper and slightly more powerful than the sportier SQ5.
2022 or 2023 Nissan Leaf
The latest version of the Leaf — the first mass-market EV from a mainstream manufacturer — costs just over $29,000 to start before any qualifying incentives, making it among the least-expensive ways to go all-electric. That base price buys a Leaf S with an estimated 149-mile range, though the step-up Leaf SV Plus (about $37,000) includes a higher-capacity battery that helps nudge its range estimate to 212 miles. It also comes with futuristic 17-inch alloy wheels just in case you need a little extra justification.
2022 Ford Escape PHEV
Offering 37 miles of all-electric range on a full charge and 40 mpg combined thereafter, the 2022 Ford Escape PHEV offers the potential of emissions-free commuting for many drivers. The plug-in hybrid version of the Escape comes in three trim levels ranging from around $37,000 to about $42,000. All of those Escape PHEV versions leave an assembly line in Michigan that helps ensure they qualify, unlike the built-in-Japan Toyota RAV4 Prime. If there’s a downside to the Escape PHEV, it’s that Ford only offers the most frugal powertrain with front-wheel drive.
2022 or 2023 BMW 330e
Don’t forget about sedans, even though SUVs are top sellers. BMW’s 3-Series offers sporty moves, lots of tech and luxury, and a price tag that undercuts the similarly sized X3 SUV by several thousand dollars. And, currently, only the 3-Series sedan is offered with a plug-in hybrid powertrain good for up to 23 miles of electric range. BMW only charges $1,000 more for the 330e over the non-hybrid 330i. Break those figures down and you’ll find it costs just $31 or so per horsepower to upgrade from the 255-hp 330i to the 288-hp 330e.
2022 or 2023 Jeep Wrangler 4xe
A tailpipe emissions-free commuter with up to 22 miles of all-electric range during the week and an off-roader for weekend adventures? Sign us up. Jeep offers its 4xe powertrain on several versions of the four-door version of its Wrangler off-roader, including the Rubicon trim level that includes chunky 33-inch tires, differential locks, and other four-wheeling enhancements. Pricing starts around $56,000.