Electric car companies tell customers to pay now to lock in tax credit on ordered cars

Some electric car buyers may have to pay now to save later.

A new federal electric car tax credit program is set to go into effect sometime after President Biden signs into law the Inflation Reduction Act that was passed by Congress last week.

The bill makes significant changes to the program, including new price caps on eligible vehicles that are set at $55,000 for cars and $80,000 for SUVs and pickups, as well as a requirement that they be assembled in North America.

The Alliance for Automotive Innovation estimates that around 70% of fully electric and plug-in hybrid cars in sale today will be immediately eliminated from eligibility on these points.

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Income limits are also being put into effect that would disqualify single-filers who make more than $150,000 annually, heads of households who make $225,000 or more, and couples with a combined income more than $300,000.

It's not exactly clear when enforcement of the new regulations will begin, but several automakers are offering their customers a way to lock in their current eligibility for vehicles that may not be delivered until well into next year.

The bill includes language that allows anyone holding a written binding contract, which was signed between Dec. 31, 2021, and the day before the enactment of the act, to file for the maximum $7,500 federal tax credit available for electric cars of any price today.

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Several automakers who engage in direct sales have now reached out to customers notifying them of this process. Among them are Rivian and Lucid, which have several American-made models priced above the threshold, and California-based Fisker, which will soon start deliveries of the Ocean SUV that will be produced for it by a contract manufacturer in Austria. All caution that they can't guarantee how the law will ultimately be implemented and if the government will honor the credit.

Vietnamese startup VinFast told customers it will give order holders a $7,500 discount, regardless of how the law is finally put into effect, according to TechCrunch.

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"VinFast is a brand that not only stands behind our vehicles with our 10-year/125,000-mile warranty but more importantly, we stand behind our customers!" the company wrote. "For customers who apply for the $7,500 tax credit under current IRC 30D requirements and are denied by the IRS for reasons not attributable to the customer, VinFast will provide the customer a $7,500 purchase price rebate (or similar rebate) on their VinFast vehicle purchase. The binding agreement contains additional details on eligibility for the rebate."

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Stellantis has not responded to a request for comment from FOX Business asking if it has any plans to work with their independent franchised dealers on similar programs, while a Ford spokesman said the company is "continuing to evaluate any tax implications of the Act." Each has several current and upcoming models that would not qualify for the credit. General Motors and Tesla have already exhausted their eligibility for the old program, which phased out for each automaker after selling 200,000 qualifying vehicles.

However, Kia has informed its dealers that all of its electric vehicles will soon be ineligible unless binding contracts are entered, and Porsche told Automotive News that "credit eligibility depends on individual sales agreement, which is a matter between them and their independently owned and operated Porsche dealership."