While Ford is still devoting considerable resources toward its transition to fully electric vehicles, pricing remains a major issue for buyers. As Ford Authority previously reported, the company has been steadily adjusting prices for the Ford Mustang Mach-E and Ford F-150 Lightning over the past year or so, either through incentives or with entirely new batteries, as demonstrated by the former vehicle, which now comes with a standard LFP battery. But the passage of the Inflation Reduction Act also introduced a substantial set of incentives into the mix, although some requirements were still being worked out, until recently. Now, the Biden administration has released its guidelines on federal tax credit eligibility for vehicles that source components from overseas. Per Automotive News, Ford EVs might lose eligibility starting in 2024 should they fail to meet the new requirements.
Set to take effect on January 1st, the new requirements may disqualify Ford EVs or any electric vehicle that sources battery components that are made or assembled by a “foreign entity of concern.” That designation applies to companies or subsidiaries of American companies based in China, Iran, North Korea, and Russia. In 2025, that same standard will apply to critical materials that originate from those nations. The guidance was issued by the U.S. Energy Department, with the Treasury Department adopting the same standard.
There are several standards that will be used to determine if a company is a foreign entity of concern. It applies to an entity incorporated, headquartered, or operating in China, Iran, North Korea, or Russia. The designation applies to a company with at least 25 percent voting interest, board seats, or equity interests held indirectly or directly by a covered nation. Additionally, any company operating outside a covered nation that contracts with or licenses technology from a foreign entity of concern but does not retain right over its operations would receive the designation.
Under the new guidelines, Ford EVs may become ineligible for the tax credit, which currently tops out at $7,500. The Ford Mustang Mach-E standard range battery may lose out on the credit in 2024 since Chinese battery manufacturer Contemporary Amperex Technology Co. Ltd. (CATL)Â supplies the LFP battery to Ford. The optional extended range battery is supplied by LG, who also manufactures batteries for the Ford E-Transit. Batteries for the Ford F-150 Lightning come from SK On, a South Korean company. The Mach-E is currently eligible for $3,750 across the entire lineup, while the F-150 Lightning and Ford E-Transit both qualify for the full $7,500. Ford will have to supply the Internal Revenue Service with information about its EV battery supply chain for future credit eligibility.
The newly issued guidelines could severely impact the BlueOval Battery Park Michigan plant, which is slated to come online in 2026. The plant is the result of a partnership with CATL, which is licensing its battery technology to Ford. The automaker recently announced it will proceed with constructing the plant, albeit with a smaller footprint, due to lower forecasted demand for EVs.
We’ll be following how these new guidelines will impact Ford EVs, so subscribe to Ford Authority for the latest Ford news updates.
Comments
Good. There shouldn’t be any tax credits or government subsidies incentivizing consumers to choose one brand or type of product over another. The entire transfer of wealth from American citizens needs to stop.
Have you checked in on your share of government benefits lately? They are handed out on (and used to maintain) every public street and avenue across the country. For Pete’s sake, the promotion of welfare is written into the preamble to the US Constitution, fortunately for all of us. Go back into a cave where you belong, W…, or maybe just take course on civics at the community college nearest you?