Volkswagen to Receive US Electric Vehicle Subsidies... First Overseas Brand to Do So

Volkswagen's electric vehicles from Germany have been added to the list of electric vehicles eligible for subsidies under the U.S. Inflation Reduction Act (IRA). This is the first time that a non-U.S. brand electric vehicle has qualified for subsidies since the IRA's detailed guidelines, which strengthened battery requirements, came into effect.

[Image source=Reuters Yonhap News]

According to the U.S. Treasury Department and others on the 20th (local time), Volkswagen's electric vehicle ID.4, produced at its Tennessee plant, met both the battery and mineral requirements as of the previous day and became eligible for IRA subsidies. All detailed trims of the ID.4 will receive the full $7,500 subsidy.

Previously, the Treasury Department's announcement on the 17th of this year included only electric vehicles from U.S. companies such as Tesla, GM, and Ford as subsidy recipients. However, Volkswagen had submitted detailed documents to qualify for the subsidy and expressed confidence in being included. Pablo Di Si, CEO of Volkswagen North America, welcomed the news in a statement, saying, "This is good news for American consumers as it broadens the range of electric vehicle options available at reasonable prices."

Passed by the U.S. Congress in August last year, the IRA essentially provides up to $7,500 in tax credits only for electric vehicles assembled in North America. Especially from this year, in addition to the North American assembly requirement, vehicles must also meet stricter battery requirements to qualify for subsidies, significantly reducing the overall eligible vehicles. The list released this week excluded companies operating factories in North America such as Nissan, Volvo, and Audi, as well as some U.S.-made electric vehicles that failed to meet the battery requirements. For example, the Hyundai GV70 assembled at the Alabama plant qualified last year as a 'North American final assembly electric vehicle' and was on the subsidy list, but it was excluded this year due to its use of Chinese-made batteries.

The political news outlet Politico reported that "Volkswagen is the first non-U.S. brand to meet all the new IRA electric vehicle tax credit requirements," and added, "If other foreign automakers such as Hyundai, BMW, Volvo, and Nissan, which were excluded from the subsidy list this time, find ways to meet the battery requirements, the list could expand further." The outlet also predicted that the inclusion of Volkswagen in the subsidy list could somewhat ease trade tensions with Europe.