AUTO

After Changes to the EV Tax Credit: Volkswagen ID.4 Still Qualifies for $7,500

February 8, 2024

The MY23 Volkswagen ID.4 with the SK On battery has a base MSRP of $38,995 before the tax credit.
Upcoming MY24 Volkswagen ID.4 models will be one of the most affordable EVs on the market thanks to the $7,500 EV tax credit.
The battery components used in the MY 23 and MY24 are produced by SK Battery in Commerce, Georgia.

The federal government changed the requirements for EV tax credits in 2024. Automakers must have EV batteries with components from friendly nations, and VW confirms that its 2023 and 2024 ID.4 models still qualify for the full $7,500 EV tax credits.

New Federal Requirements for Battery Components

In 2023, automakers had to assemble their EVs in the United States to qualify for the maximum tax credit. After the new year began, automakers had to meet another mandate. Currently, EVs must still be assembled in the US, and batteries cannot be manufactured in places like China and North Korea.

The new addition to the EV tax credit rules has forced some automakers to shift their battery sourcing. Unfortunately, some American-made EVs are no longer eligible for tax credits because their battery components come from China. Automakers like Ford are working hard to change battery procurements to bring EV tax credits back to their drivers. The automaker uses batteries from CATL for the Mustang Mach-E.

Why the ID.4 Qualifies for Tax Credits

Volkswagen confirms the ID.4 will continue to qualify for the EV tax credit thanks to battery sourcing from SK Battery in Commerce, Georgia. Volkswagen isn’t the only automaker that relies on the SK On battery. Ford uses it in the F-150 Lightning and Hyundai Motor Group has a partnership to build batteries for the Hyundai and Kia EV lineup. Because of the SK On batteries, VW expects the ID.4 will retain its tax-credit status throughout 2024. Only ID.4 models with SK batteries will qualify for the full tax credit.

The automaker is in a unique position, as it’s the only foreign automaker to have a battery-electric vehicle that qualifies for the full $7,500 tax credit. Nissan is the other foreign automaker that has qualified for the tax credit, but its Nissan Leaf only qualifies for half of the credit. Still, saving $3,750 for an EV isn’t bad.

The federal tax credit happens at the point of sale, so EV shoppers who qualify can use the tax credit as a down payment. The federal government transfers the tax credit to participating dealerships at the point of sale.

Saving Money with the ID.4

The EV tax credit does make a difference in sales. Volkswagen saw an 84% increase in ID.4 sales in 2023 compared to 2022. The ID.4 was the fifth best-selling EV in the United States. The Tesla Model Y and Model 3 were first and second, followed by the Chevy Bolt in third, and the Mustang Mach-E in fourth.

The ID.4 also comes with three years of unlimited 30-minute free charging at Electrify America stations. Those 30-minute charges would cost about $25, and if an ID.4 driver charges once per week at an EA station, that’s an annual savings of $1,300. Over three years, the tax credit and EA credits could save VW ID.4 drivers about $10,000!

Volkswagen offers the ID.4 with two battery pack options. The first is a 62-kWh battery with about 209 miles of range, and the second is an 82-kWh battery with about 275 miles of range. Both models are assembled in Chattanooga, Tennessee, and according to Pable Di Si, President and CEO of Volkswagen Group of America “Every ID.4 sold supports thousands of American jobs and helps advance our goal of a carbon-neutral future.”

Because this is what it’s really all about – jobs and carbon neutrality.