VW ‘cautiously optimistic’ Chattanooga-made ID.4 will gain tax credit

Staff photo by Matt Hamilton / Workers watch as vehicles roll off the line during the launch celebration for the Volkswagen ID.4 electric SUV at the Chattanooga assembly plant in 2022.
Staff photo by Matt Hamilton / Workers watch as vehicles roll off the line during the launch celebration for the Volkswagen ID.4 electric SUV at the Chattanooga assembly plant in 2022.

Volkswagen's Chattanooga-built ID.4 electric vehicle posted 84.2% higher sales in 2023, figures show, but it's missing from the newest list of vehicles qualifying for a federal tax credit.

Volkswagen of America spokesperson Mark Gillies said this week the company has submitted the paperwork for the tax credit.

Gillies said in an email company officials are "cautiously optimistic" the vehicles will again qualify.

(READ MORE: Volkswagen rolls out the ID.4)

Last year, the ID.4 was eligible for the $7,500 credit available on models placed in service in 2023, the company said.

Volkswagen was the only international automaker to have a full-battery electric vehicle eligible for the entire credit, and that was due to assembly and sourcing in the North American region, the automaker said last April.

(READ MORE: VW says ID.4 eligible for tax credit)

"The ID.4 is already one of the lowest-priced electric SUVs on the market, and the $7,500 federal tax credit makes it even more attainable," said Pablo Di Si, president and CEO of Volkswagen Group of America, in a statement at the time.

But new requirements largely related to the U.S.-based building of the vehicles and batteries kicked in when the calendar shifted to 2024 under the Inflation Reduction Act of 2022.

Karl Brauer, executive analyst for auto research website iSeeCars.com, said by phone the requirements automakers must meet are more stringent to qualify for the tax credits.

Brauer said that prior to the Inflation Reduction Act, the number of vehicles that could quality for federal tax credits had numbered in the 40s.

As of the first of the year, only about a dozen vehicles qualified, according to the U.S. Treasury Department. But, like Volkswagen, other automakers may have vehicles qualify later in the year.

Brauer said the act's tax credits aren't helping as much as those in the past.

He said 2024 will be "a very telling year" in terms of EV sales with the Inflation Reduction Act credits and other factors.

Also, impacting the price of EVs are actions by states.

In Tennessee, the Transportation Modernization Act of 2023 increased the cost to renew a fully electric, hybrid and plug-in hybrid vehicle for renewals processed on or after Jan. 1, 2024, according to the Hamilton County Clerk's Office.

The electric and hybrid vehicle fees are in addition to standard renewal fees, the office said.

For example, vehicle renewal fees for all-electric vehicles will be $200 for those processed on or after Jan. 1 and prior to Jan. 1, 2027, according to the office.

Brauer said vehicle price is usually the single biggest factor purchasers consider.

For Volkswagen of America, the ID.4's sales numbers in 2023 largely fueled a 9.3% jump in the number of vehicles sold last year versus 2022, though the Chattanooga-built Atlas SUVs along with the Jetta sedan posted key gains, figures show.

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.

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