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Kelley Blue Book: How the new electric vehicle tax credit rules are affecting automakers’ sales

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Never let anyone tell you policy doesn’t affect markets.

Last summer, Congress revised the rules governing the $7,500 tax credit many Americans can claim when they buy an electric car. Among other changes, the new rules applied the tax credit only to electric vehicles built in North America.

New data show the rules have boosted some automakers and hurt others.

Experian
EXPGY,
-0.71%

tracks registrations of new vehicles nationwide. In January – when the new rules became active – Experian reports that sales of domestic EVs surged. Sales of EVs built outside North America fell off.

Trade publication Automotive News explains, “While new EV registrations grew 74% from January 2022, the tax credit revisions slowed the red-hot growth of Korean imports from Hyundai Motor Group
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-2.27%
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which for much of last year was running second to Tesla.”

More: New 2023 EV tax incentives: How they work, which cars qualify, and where to get even more savings

The eight best-selling EVs were all built in North America. They included the usual gold and silver winners – the Tesla
TSLA,
-2.17%

Model Y and Model 3. The Chevrolet Bolt EV took third.

Fourth went to a German company, but a vehicle built in Tennessee —The Volkswagen ID.4. That’s big news — the ID.4 jumped from ninth place last year to fourth in early 2023.

The Ford
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-4.40%

Mustang Mach-E (built in Mexico) took fifth.

The highest-ranking electric car built outside North America was ninth. The Hyundai Ioniq 5 has been a critical smash (and won KBB’s Best New Model award) but slipped from seventh to ninth. Its fraternal twin, the Kia EV6 (which uses most of the same hardware but looks drastically more sporty), fell from eighth to out of the top 10 entirely.

Hyundai and Kia (owned by the same company) have factories in Georgia. But those factories don’t build EVs.

Check out: The 2024 Honda Prologue: Honda’s new electric SUV is attractive and spacious. When can you get one?

The companies are scrambling to fix that, recently breaking ground on a new Georgia EV plant expected to begin producing cars in 2025. It’s not yet clear what vehicles that facility will produce.

This story originally ran on KBB.com. 

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