The Inflation Reduction Act of 2022 introduced a lot of confusion regarding federal EV tax credits, which were subsequently cleared up when the U.S. Treasury released its updated guidance on vehicle eligibility. Fortunately, a number of Ford vehicles qualified for the credit, but since the act was signed into law, the clock was ticking on how long they would remain eligible. Now, according to CarsDirect, the new eligibility requirements set to take effect in 2024 are set to impact the Ford Mustang Mach-E in a major way, as the entire lineup will lose out on the credit.
The site based its report on a bulletin sent to Ford dealers last month, which was relatively blunt about the situation regarding the Ford Mustang Mach-E and its eligibility for the federal EV tax credit. Essentially, the automaker expects that the Mach-E will completely lose out on eligibility starting in 2024. Currently the EV is only eligible for $3,750, or half the credit, due to sourcing requirements for its battery. The standard range models currently feature a lithium iron-phosphate from CATL, while extended range variants are equipped with a battery from LG.
In all likelihood, the model is losing out on the tax credit due to its battery component supply chain. As Ford Authority recently reported, the U.S. Department of Energy issued its guidance on tax credit eligibility last week, with new standards created to identify any “foreign entity of concern.” Basically, a company that is based in China, Iran, North Korea, and Russia or has operations in any of those countries could fall under that designation. If the battery components in the Ford Mustang Mach-E are sourced from one or more companies under that designation, then that’s almost certainly why it will not be eligible for the tax credit in 2024.
Unfortunately, buyers unable to purchase a Ford Mustang Mach-E this month are out of luck if they were interested in that extra $3,750 discount. There is a loophole for EV shoppers to get the full $7,500 if they lease, but Ford has opted to keep the credit in that situation. With that said, there is a chance that the new requirements could be delayed, as Senator Debbie Stabenow recently said that the Biden administration was considering giving automakers more time to meet the requirements.