Rivian EVs Get Reduced Federal Tax Credit Due to Battery Supply Chain

While Rivian buyers were originally expecting a $7,500 federal tax credit for the company’s electric trucks and SUVs, some models now only qualify for a reduced credit. 

However, buyers can now receive this $3,750 credit instantly at the point of sale. This provides buyers the convenience of a purchase rebate versus needing to wait for a tax refund. The streamlined process should help ease the impact of the lower credit amount for eligible Rivian models like the R1T pickup and R1S SUV versions with standard battery packs.

The change comes from new requirements regarding “Foreign Entity of Concern” (FEOC) in the battery supply chain. Vehicles with batteries or battery components from restricted countries including China will see the credit reduced. For Rivian, this impacts the models over the $80,000 maximum vehicle price threshold.

The income eligibility requirements also remain unchanged – $300,000 for married joint filers, $225,000 for heads of households, and $150,000 for other filers.

Our Thoughts

The FEOC clause aims to encourage more domestic EV supply chain development but may hamper EV adoption and auto industry ties with China. Rivian will need to ensure compliance with the battery supply restrictions to deliver the expected tax savings to its customers going forward.

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