The EV tax credit loophole doesn’t cover most EVs. But there’s a loophole.

New rules(opens in a new tab) The battery materials procurement regulations went into effect in April and eligibility for tax refunds for electric vehicles declined as planned. Only a small selection of the electric vehicles currently on the market – mostly only those from US automakers – can save thousands of dollars. That’s the situation for buyers who are end users anyway, but what about EV buyers who are end users? Landlord? (“Lessor” means “entity that rents something.”)

For an EV lessor, virtually any EV qualifies for credit, which in turn means the end user — the person paying for the lease and, as you know, driving the car — can save a lot of money. This is the case when the lessor, usually a car dealership, decides to pass at least some of those savings on to the consumer. While the savings generated by the tax credit may not necessarily be reflected on the receipt, it is possible theoretically still be relevant.


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According to CNET(opens in a new tab), automakers market their lease terms with monetary amounts that align with the famed $7,500 tax benefit. Hyundai’s $499 monthly lease price for the Ioniq 5 draws the consumer’s attention to a “$7,500 full electric rental premium” and Kia offers a $7,500 “bonus” which is only valid until July 5th. Assuming there’s no prior markup to offset the rebate, these are nice bargains, theoretically possible thanks to the tax credit.

What’s it worth, a guy named Dave Walters who spoke to CNBC(opens in a new tab) recently leased a South Korean-made Hyundai, Ioniq, on Saturday and said by his own calculation “that was a few hundred dollars less a month” than if the dealer hadn’t received the tax credit.

Tax breaks for the purchase of electric vehicles in the USA result from the Inflation Reduction Act (IRA), which was supplanted by the US legislature. So you didn’t expect these savings to be easy to come by, did you? It breaks down as follows: Half of the Clean Vehicle Credit — $3,750 — is contingent on manufacturing at least 50 percent of the battery components in the United States or elsewhere in North America, while the other $3,750 can be claimed, if at least 50 percent of battery components are manufactured in the United States or elsewhere in North America 40 percent of vital minerals come from the United States or(opens in a new tab) “a country with which the United States has a free trade agreement.”

But the IRA says leased cars are technically commercial vehicles, which is supposedly why they’re exempt from all that battery-mineral sourcing rigamamarole. It’s also worth noting that the rigamarole will be harder. For 2023, the applicable percentage is 40 percent. In 2024 the relevant 40 percent of mineral sourcing increases to 50 percent, then it keeps increasing until it reaches 80 percent in 2027.

In theory, this means more US auto battery minerals will be used in more EVs and there will be plenty of tax credits. In practice, we just have to wait and see.

Zack Zwiezen

Zack Zwiezen is a USTimesPost U.S. News Reporter based in London. His focus is on U.S. politics and the environment. He has covered climate change extensively, as well as healthcare and crime. Zack Zwiezen joined USTimesPost in 2023 from the Daily Express and previously worked for Chemist and Druggist and the Jewish Chronicle. He is a graduate of Cambridge University. Languages: English. You can get in touch with me by emailing

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