Ford Motor Company has announced that it is unlikely that its Mustang Mach-E electric vehicles currently available in dealer showrooms will qualify for federal tax credits in January. This revelation comes in response to new battery sourcing restrictions issued by the U.S. Treasury, set to take effect on January 1. These restrictions are designed to shift the U.S. electric vehicle (EV) supply chain away from reliance on Chinese components.
The current model of the Mustang Mach-E is eligible for a $3,750 federal tax credit, but with the upcoming changes in regulations, Ford is uncertain about the vehicle’s continued qualification. The company is still reviewing whether its F-150 Lightning EV truck will qualify for tax credits after the new regulations come into effect. However, Ford has not provided specific details on why the Mach-E is expected to lose the tax credit.
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Despite facing challenges, Ford has experienced success in the EV market, selling 35,908 Mach-E units in the U.S. during the first 11 months of the year, reflecting a 3.5% increase compared to the same period last year. Nevertheless, in October, Ford announced production cuts for the Mach-E and postponed around $12 billion in EV investments, including delaying the construction of its second battery plant in Kentucky.
Ford informed its dealers about the potential expiration of the tax credit through a bulletin, urging them to motivate customers to make purchases before the year-end to ensure eligibility for the credit. The company emphasized that this would be an excellent time to close sales deals and capitalize on the incentive.
In contrast, General Motors anticipates that many of its electric vehicles will still qualify for U.S. tax credits in the coming year, despite the stricter rules on Chinese battery content. Similarly, Volkswagen expressed cautious optimism that its 2024 model year ID.4 assembled in Chattanooga would qualify for the full $7,500 tax credit in the next year.
Ford had previously announced ambitious plans to triple the output of its all-electric Mustang Mach-E, with the goal of producing over 200,000 units per year by 2023 for North America and Europe. However, recent developments, including production cuts and delays in EV investments, indicate the challenges faced by automakers in navigating the evolving landscape of EV regulations and supply chain constraints.
Source: Reuters
