The U.S. Treasury Department has announced upcoming revisions to its electric vehicle tax credit guidelines that will add new ways for dealers to collect payments from car buyers.
The news was revealed during a press briefing on September 8, where the Treasury also noted it would be launching additional tax incentives before the year’s end to support the Biden Administration’s clean energy focus. While some details were missing from the department’s announcement, assistant secretary for tax policy Lily Batchelder told reporters that car buyers will soon be able to transfer up to $7,500 in electric vehicle tax credits to their dealer at the time of purchase, allowing them to instantly use the amount as a down payment. To leverage this new option, dealers will need to join the government’s pre-approval program by visiting the IRS website. “In the next few months, dealers will be able to register via an online IRS portal,” Batchelder explained, adding: “In January, registered dealers will able to submit ‘clean vehicle’ sales information to the IRS and promptly receive payments for transferred credits.”
This new payment option may make it easier to justify an EV purchase among consumers, especially for those struck by sticker shock. While values have started to decline in 2023, battery-powered cars still cost substantially more on average than their ICE counterparts, with most electrified models retailing at luxury or premium prices. Although it is not clear when the IRS website will allow dealers to register for electric vehicle tax credit pre-approval, the move is likely to save time for both the consumer and the dealer. The pre-approval tool could also prove to be a faster and more reliable price calculator than current systems used by dealers, creating opportunities for sales staff to show their clients precisely how much they can reduce their down payment by transferring their credits.
