Want a tax credit for an expensive electric vehicle like Rivian? So buy now before the Inflation Reduction Act is passed.

The Inflation Reduction Act (IRA), the Democrats’ streamlined environmental and economic package, appears to have enough momentum to pass and comes with tax benefits for electric vehicle buyers. But as the bill enters the home stretch, electric vehicle company Rivian is not part of the crowd celebrating the legislative milestone. Despite the benefits of climate change touted by IRA supporters, it appears the bill will actually increase the cost of some electric vehicles in the short term.

Or, as a Rivian representative told Reuters on Aug. 3, it appears the bill is set to “cut the rug for consumers considering purchasing an American-made electric vehicle.” So if you’re already on the hunt for a premium EV like a Rivian, with models ranging from $67,500 to $98,000, first off, congratulations on having all that disposable income. But second: if you want the biggest tax credit possible, you need to look at this bill carefully.

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Foreign battery parts are a problem

For starters, there’s a giant, looming problem for manufacturers and that problem is called China.

According to a 2021 report by the Federal Consortium for Advanced Batteries, a government group led by the Department of Energy, China manufactures 76% of lithium batteries, compared to 8% in the United States. The version of the IRA that just passed the Senate, and looks set to pass the House, will require that, by 2024, electric vehicle battery materials be at least 40% comes from North America or a partner country under a free trade agreement with the United States. Otherwise, the purchaser of said electric vehicle does not qualify for the full $7,500 tax credit. This supply requirement increases to 100% by 2029. This means that huge and heartbreaking changes in the battery supply chain must occur over the next seven years if these tax credits benefit long-term customers. consumers of electric vehicles.

Meet the New Tax Credit: Not as Generous as the Old Tax Credit

But Rivian detailed another likely problem in a Friday press release: Current tax laws are more favorable to current Rivian buyers than new ones will be. “Under these new restrictions,” writes Tony Caravano, head of customer engagement at Rivian, “an electric pickup truck or SUV must cost less than $80,000 and the buyer must fall below certain income thresholds to be eligible”.

These provisions of the bill must particularly sting for Rivian because the company just raised the price of the R1S electric SUV by $12,000 to $84,500 in March. Before that, the price of an R1S would have been below this new price threshold, at $72,500. And with respect to those income requirements, for buyers to qualify for full credit, they must earn less than $150,000 as individual income or less than $300,000 for those filing jointly.

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The best electric vehicles for all types of drivers

So if you were about to buy a Rivian, the conclusion is that chances are your tax credit is about to disappear. But Rivian has a solution, according to the press release: “Fortunately, buyers who have a ‘binding written contract’ to purchase a qualified electric vehicle before the Inflation Reduction Act becomes law will be able to apply in under current IRC 30D tax credit requirements. ”

Rivian then provides a page where consumers can immediately enter into such a contract. If you click here, you can also make your Rivian purchase official today by paying the company a $100 non-refundable deposit.

Most buyers of more economically priced EVs, like the Nissan Leaf or Kia Niro EV, need not worry about this IRA provision. In fact, even many Rivian vehicles will qualify for the new tax credit. But if you’re planning on buying, say, a $169,000 Lucid Air and you want the cost to come down a bit, there’s no better time than the present to ask the company for a “written contract.” binding” like the one Rivian offers.

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