The US Treasury Department announced Friday that the IRS had already received more than 7,000 registrations from car dealers to offer electric vehicle tax credits at the point-of-sale starting January 1, Automotive News reports.
US car dealers show support for new EV tax credit provisions
The National Automobile Dealers Association’s 2023 data revealed that there are about 17,000 franchised dealerships in the US that currently have light-duty vehicles. That said, the 7,000+ registrations figure could be higher.
“There are many more dealerships that are covered by those 7,000 registrations, and this does not include the many registration applications submitted but the IRS has not yet approved.”
NADA spokesperson (via Automotive News)
The NADA spokesperson further indicated the growing support of the previously hesitant car dealerships for the new tax credit provisions for EV buyers.
“What the response to the [Energy Credits Online] portal actually reveals is that dealers are overwhelmingly embracing this new process.”
NADA spokesperson (via Automotive News)
Changes
As of now, the Inflation Reduction Act’s EV tax credits require eligible customers to wait until the next tax return filing to obtain the incentive, which usually takes several months.
In a significant development, the IRA’s new guidance aims to accelerate this prolonged process of receiving the EV tax credits.
Electric vehicle buyers can finally acquire their preferred eligible models by paying a lower amount upfront, as the dealers will offer the IRA’s tax credits of up to $7,500 at the point of sale starting next year. In return, buyers will transfer their tax credits to the dealers, and the government will reimburse them.
Concerns
InsideEVs noted that car dealers’ initial reluctance to the electric vehicle shift was due to various concerns such as follows:
- High-cost charging infrastructure development
- Complex and costly process of educating sales personnel
- Lower sales commissions and after-sales profits
- EVs’ less maintenance attribute due to their fewer moving parts, etc.
Nonetheless, the revised IRS guidance could be a significant boost to dealers’ morale towards the EV transition. It can aid in attracting new customers, which will reduce their piling electric vehicle inventories.
By next year, registered dealers can employ an electronic submission for their EC sales report to the IRS and receive reimbursement via “direct deposit for transferred credits within 72 hours.”
Before that, they must register through the new IRS Energy Credits Online website for the buyers to get/transfer their federal tax credits and utilize them as a down payment for qualified EV models.
