TL/DR –
Volkswagen’s Chattanooga-made ID.4 electric vehicle saw a rise in sales of 84.2% in 2023 but is missing from the newest list of vehicles qualifying for a federal tax credit. In 2023, the ID.4 was eligible for a $7,500 credit, but changes to U.S.-based building requirements for vehicles and batteries under the Inflation Reduction Act of 2022 may affect this. However, the company has submitted paperwork and is “cautiously optimistic” that the vehicle will qualify again.
Sales Increase for Chattanooga-built Volkswagen ID.4 EV But Misses Federal Tax Credit List
Volkswagen’s Chattanooga-built ID.4 electric vehicle saw an impressive 84.2% sales increase in 2023. However, the latest list of vehicles qualifying for a federal tax credit excludes it.
Efforts for Tax Credit Approval
Volkswagen of America spokesperson Mark Gillies confirmed the company has applied for the tax credit. He conveyed a “cautiously optimistic” attitude that the vehicles would qualify again.
Volkswagen ID.4 launch details
Previous Tax Credit Reception
In 2023, the ID.4 was eligible for the full $7,500 credit, according to the company. Volkswagen was the only international automaker to have a full-battery electric vehicle eligible for the entire credit, thanks to assembly and sourcing in the North American region.
Volkswagen ID.4’s previous tax credit eligibility
Impact of New Federal Requirements
New requirements under the Inflation Reduction Act of 2022, mainly tied to U.S.-based building of vehicles and batteries, affected the ID.4. Karl Brauer, executive analyst for iSeeCars.com, highlighted the stricter requirements to qualify for tax credits.
Around 40 vehicles qualified for federal tax credits before the Act, but since the start of 2024, only about a dozen qualify, states the U.S. Treasury Department. However, other automakers beside Volkswagen may have vehicles qualify later in the year.
States’ Actions Affecting EV Prices
State actions also impact EV prices. In Tennessee, the Transportation Modernization Act of 2023 increased the cost to renew fully electric, hybrid, and plug-in hybrid vehicles from Jan. 1, 2024.
These fees are in addition to standard renewal fees. For instance, renewal fees for all-electric vehicles will be $200 for those processed between Jan. 1, 2024, and Jan. 1, 2027, says the Hamilton County Clerk’s Office.
Overall Vehicle Sales Growth
The ID.4’s robust 2023 sales numbers contributed to a 9.3% rise in Volkswagen of America’s total vehicles sold last year compared to 2022. The Chattanooga-built Atlas SUVs and Jetta sedan also reported significant gains.
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