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The Zacks Analyst Blog Highlights General Motors, Ford, Stellantis and Tesla
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For Immediate Release
Chicago, IL – April 20, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) and Tesla (TSLA - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
4 Auto Giants Whose EVs Qualify for $7500 U.S. Tax Credit
Last year, President Biden passed the boldest climate bill in U.S. history — also called the Inflation Reduction Act (IRA) — aimed at accelerating the transition away from fossil fuels. The legislation called for tax incentives, among other provisions, to motivate Americans to adopt environmentally friendly vehicles that do not rely on fossil fuels. The law also directed the Treasury Department to develop two supplementary regulations concerning the procurement of automotive battery components and crucial minerals.
On Monday, the U.S. Treasury unveiled a comprehensive list of vehicles eligible for electric vehicle (EV) tax credits under the new battery sourcing criteria. These incentives favor companies that source battery minerals from the United States or its trade allies and produce battery components within North America.
Per the list released by the U.S. Treasury Department, EVs manufactured by just four auto biggies, General Motors, Ford, Stellantis and Tesla, qualified for the $7,500 in tax credits this year.
Before we list the EVs that met the requirements for the $7,500 federal tax credit, let's dig deeper into key pointers regarding the federal tax credits in the Inflation Reduction Act.
Eligibility & Sourcing Requirements to Join the US Tax Credit Party
First things first. The IRA includes a $7,500 tax credit till 2032 on the purchase of a new EV. Importantly, the tax credit will be sans the 200,000-car cap. In the previous scenario, the tax credit was phased out once a company reached the 200,000 EV sales mark. The updated EV tax credit removes that cap at the start of 2023. Drivers can qualify for the tax credit, provided that the listed price of the electric vehicle does not exceed $55,000 for sedans or $80,000 for SUVs and vans.
However, the credits come with certain eligibility criteria and sourcing requirements for critical minerals and battery components. To qualify for the full $7,500 EV tax credit, clean vehicles must meet stringent sourcing requirements for both critical minerals and battery components. Those meeting only one of the two requirements can still receive a $3,750 credit.
Starting in 2023, to be eligible for a $3,750 credit, at least 40% of the critical minerals used in an EV's battery must be sourced from the United States or a country with which the United States has a free trade agreement (FTA). The percentage requirement increases incrementally in the following years, reaching 80% in 2027.
The other $3,750 credit is contingent on meeting domestic or FTA-based sourcing requirements for battery components. In 2023, at least 50% of these components must come from the United States or FTA countries. This percentage rises over time, reaching 100% in 2029.
The updated rules for EV tax credits specifically target mineral sourcing in EV batteries. With the exclusion of "foreign entities of concern," such as China and Russia, from the list of approved trading partners, the auto industry faces significant challenges in sourcing critical minerals and battery components. China, in particular, plays a dominant role in the EV battery market, which makes the new rules particularly troublesome for automakers. Compliance with these regulations may necessitate a significant shift in supply chains and increased investments in domestic production capacities.
Meanwhile, countries having FTAs with the United States include Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Japan, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore.
Tax Credit for EVs: Winners & Losers
Several electric vehicles currently qualify for the full $7,500 federal tax credit, which means buyers can save a significant amount on their purchase. These models include the Cadillac Lyriq, Chevrolet Blazer, Chevrolet Bolt and Bolt EUV, Chevrolet Equinox, Chevrolet Silverado, Ford F-150 Lightning (both standard and extended range battery), Tesla Model 3, and Tesla Model Y (both all-wheel and long-range drives).
Meanwhile, the following EVs and hybrids are no longer eligible for the federal tax credit. This list of vehicles includes BMW 330e, various Nissan Leaf models (S, S Plus, SL Plus, SV, and SV Plus), Volvo S60 models (Extended Range and T8 Recharge), Audi Q5 TFSI e Quattro, BMW X5, Chrysler Pacifica, Ford Escape Plug-In, Lincoln Aviator Grand Touring, Rivian R1S, Rivian R1T, and Volkswagen ID.4 models (Pro, Pro S, S, AWD Pro, and AWD Pro S).
The exclusion of many vehicles from the list is a result of new federal guidelines that mandate eligible vehicles to be manufactured in North America. In a statement released on Monday, Hyundai informed Reuters that it plans to "leverage key provisions in the Inflation Reduction Act to expedite the shift towards electrification." Meanwhile, Nissan communicated to the news agency that it is "collaborating closely with our suppliers and remain optimistic that the Leaf will qualify for at least a partial credit in the future."
A select group of hybrid vehicles and EVs qualify for a partial tax credit, which still offers some savings for buyers interested in these models. The vehicles eligible for the partial tax credit include Ford Escape, Jeep Grand Cherokee, Jeep Wrangler, Lincoln Corsair Grand Touring, Ford E-Transit, Mustang Mach-E and Tesla Model 3 Standard Range.
Final Thoughts
With the growing concern for the environment and the push for cleaner energy sources, tax incentives for electric vehicles are becoming increasingly important for consumers. Understanding which models qualify for the full $7,500 federal tax credit, those that no longer meet requirements, and those eligible for partial tax credits can help potential buyers make informed decisions when purchasing an electric vehicle.
While the new tax credits for EVs aim to boost adoption while promoting domestic production and reducing dependence on potentially adversarial nations, the success of these tax credits will depend on the ability of the auto industry to adapt to the new sourcing requirements and the willingness of consumers to navigate the complex eligibility criteria.
As vertical integration is becoming crucial for automakers with each passing day to support the production of their zero-emissions vehicles, they are increasing their focus on revving up battery production and diversifying their manufacturing sources away from China. Automakers like TSLA, STLA, GM and F are making large investments in North American battery production, which will enhance supply chain resilience, lessen production bottlenecks and decrease production costs.
While Tesla, General Motors and Stellantis carry a Zacks Rank #3 (Hold), Ford presently holds a Zacks Rank #4 (Sell).
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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The Zacks Analyst Blog Highlights General Motors, Ford, Stellantis and Tesla
For Immediate Release
Chicago, IL – April 20, 2023 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: General Motors (GM - Free Report) , Ford (F - Free Report) , Stellantis (STLA - Free Report) and Tesla (TSLA - Free Report) .
Here are highlights from Wednesday’s Analyst Blog:
4 Auto Giants Whose EVs Qualify for $7500 U.S. Tax Credit
Last year, President Biden passed the boldest climate bill in U.S. history — also called the Inflation Reduction Act (IRA) — aimed at accelerating the transition away from fossil fuels. The legislation called for tax incentives, among other provisions, to motivate Americans to adopt environmentally friendly vehicles that do not rely on fossil fuels. The law also directed the Treasury Department to develop two supplementary regulations concerning the procurement of automotive battery components and crucial minerals.
On Monday, the U.S. Treasury unveiled a comprehensive list of vehicles eligible for electric vehicle (EV) tax credits under the new battery sourcing criteria. These incentives favor companies that source battery minerals from the United States or its trade allies and produce battery components within North America.
Per the list released by the U.S. Treasury Department, EVs manufactured by just four auto biggies, General Motors, Ford, Stellantis and Tesla, qualified for the $7,500 in tax credits this year.
Before we list the EVs that met the requirements for the $7,500 federal tax credit, let's dig deeper into key pointers regarding the federal tax credits in the Inflation Reduction Act.
Eligibility & Sourcing Requirements to Join the US Tax Credit Party
First things first. The IRA includes a $7,500 tax credit till 2032 on the purchase of a new EV. Importantly, the tax credit will be sans the 200,000-car cap. In the previous scenario, the tax credit was phased out once a company reached the 200,000 EV sales mark. The updated EV tax credit removes that cap at the start of 2023. Drivers can qualify for the tax credit, provided that the listed price of the electric vehicle does not exceed $55,000 for sedans or $80,000 for SUVs and vans.
However, the credits come with certain eligibility criteria and sourcing requirements for critical minerals and battery components. To qualify for the full $7,500 EV tax credit, clean vehicles must meet stringent sourcing requirements for both critical minerals and battery components. Those meeting only one of the two requirements can still receive a $3,750 credit.
Starting in 2023, to be eligible for a $3,750 credit, at least 40% of the critical minerals used in an EV's battery must be sourced from the United States or a country with which the United States has a free trade agreement (FTA). The percentage requirement increases incrementally in the following years, reaching 80% in 2027.
The other $3,750 credit is contingent on meeting domestic or FTA-based sourcing requirements for battery components. In 2023, at least 50% of these components must come from the United States or FTA countries. This percentage rises over time, reaching 100% in 2029.
The updated rules for EV tax credits specifically target mineral sourcing in EV batteries. With the exclusion of "foreign entities of concern," such as China and Russia, from the list of approved trading partners, the auto industry faces significant challenges in sourcing critical minerals and battery components. China, in particular, plays a dominant role in the EV battery market, which makes the new rules particularly troublesome for automakers. Compliance with these regulations may necessitate a significant shift in supply chains and increased investments in domestic production capacities.
Meanwhile, countries having FTAs with the United States include Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Japan, Jordan, Korea, Mexico, Morocco, Nicaragua, Oman, Panama, Peru and Singapore.
Tax Credit for EVs: Winners & Losers
Several electric vehicles currently qualify for the full $7,500 federal tax credit, which means buyers can save a significant amount on their purchase. These models include the Cadillac Lyriq, Chevrolet Blazer, Chevrolet Bolt and Bolt EUV, Chevrolet Equinox, Chevrolet Silverado, Ford F-150 Lightning (both standard and extended range battery), Tesla Model 3, and Tesla Model Y (both all-wheel and long-range drives).
Meanwhile, the following EVs and hybrids are no longer eligible for the federal tax credit. This list of vehicles includes BMW 330e, various Nissan Leaf models (S, S Plus, SL Plus, SV, and SV Plus), Volvo S60 models (Extended Range and T8 Recharge), Audi Q5 TFSI e Quattro, BMW X5, Chrysler Pacifica, Ford Escape Plug-In, Lincoln Aviator Grand Touring, Rivian R1S, Rivian R1T, and Volkswagen ID.4 models (Pro, Pro S, S, AWD Pro, and AWD Pro S).
The exclusion of many vehicles from the list is a result of new federal guidelines that mandate eligible vehicles to be manufactured in North America. In a statement released on Monday, Hyundai informed Reuters that it plans to "leverage key provisions in the Inflation Reduction Act to expedite the shift towards electrification." Meanwhile, Nissan communicated to the news agency that it is "collaborating closely with our suppliers and remain optimistic that the Leaf will qualify for at least a partial credit in the future."
A select group of hybrid vehicles and EVs qualify for a partial tax credit, which still offers some savings for buyers interested in these models. The vehicles eligible for the partial tax credit include Ford Escape, Jeep Grand Cherokee, Jeep Wrangler, Lincoln Corsair Grand Touring, Ford E-Transit, Mustang Mach-E and Tesla Model 3 Standard Range.
Final Thoughts
With the growing concern for the environment and the push for cleaner energy sources, tax incentives for electric vehicles are becoming increasingly important for consumers. Understanding which models qualify for the full $7,500 federal tax credit, those that no longer meet requirements, and those eligible for partial tax credits can help potential buyers make informed decisions when purchasing an electric vehicle.
While the new tax credits for EVs aim to boost adoption while promoting domestic production and reducing dependence on potentially adversarial nations, the success of these tax credits will depend on the ability of the auto industry to adapt to the new sourcing requirements and the willingness of consumers to navigate the complex eligibility criteria.
As vertical integration is becoming crucial for automakers with each passing day to support the production of their zero-emissions vehicles, they are increasing their focus on revving up battery production and diversifying their manufacturing sources away from China. Automakers like TSLA, STLA, GM and F are making large investments in North American battery production, which will enhance supply chain resilience, lessen production bottlenecks and decrease production costs.
While Tesla, General Motors and Stellantis carry a Zacks Rank #3 (Hold), Ford presently holds a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.