Most electric vehicles won't qualify for federal tax credit

FILE - A sales associate talks with a prospective buyer of a Cooper SE electric vehicle on the showroom floor of a Mini dealership July 7, 2022, in Highlands Ranch, Colo. The surprise deal by Senate Democrats on a pared-down bill to support families, boost infrastructure and fight climate change is likely to jump start sales of electric vehicles. (AP Photo/David Zalubowski, File)

DETROIT (AP) - A tax credit of up to $7,500 could be used to defray the cost of an electric vehicle under the Inflation Reduction Act now moving toward final approval in Congress.

But the auto industry is warning that the vast majority of EV purchases won't qualify for a tax credit that large.

That's mainly because of the bill's requirement that, to qualify for the credit, an electric vehicle must contain a battery built in North America with minerals mined or recycled on the continent.

And those rules become more stringent over time - to the point where, in a few years, it's possible that no EVs would qualify for the tax credit, says John Bozzella, CEO of the Alliance of Automotive Innovation, a key industry trade group. As of now, the alliance estimates that about 50 of the 72 electric, hydrogen or plug-in hybrid models that are sold in the United States wouldn't meet the requirements.

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