California Air Resources Board

Agenda

• Welcome and Introductions
• Summary of October 2023 meeting 
• Presentation – new IRS guidance on how consumers will be able to use the federal tax credit on new and used EVs in 2024 
  • Anthony Bento, California New Car Dealers Association 
  • Tom Knox, Valley CAN 
• Q&A session 

FAQs on the new guidelines can be found on the IRS website here.

The new IRS guidance makes several changes to the tax credit for both new and used vehicles. Beginning Jan. 1, 2024, taxpayers may have the option to transfer the credit to the dealer at the point of sale. This means that eligible dealerships would be able to either lower the cost of the vehicle by the corresponding credit amount or provide the consumer with a cash equivalent.

New Vehicles – This program is set-up for the next eight years and is focused on moderate to moderate to higher income levels. These new guidelines are the Federal Government trying to encourage domestic or friendly country manufacturing of vehicles. Final assembly needs to be in North America.  This limits availability of vehicles for this credit.

• Buyers will also now have the option to get the credit instantly instead of waiting for the next year's tax season.
• Those purchasing an EV would need to attest that they meet the individual requirements — like that they're purchasing the vehicle for personal use, they're not a dependent on anyone's taxes, and they're under the income limit.
• Then they'd transfer the tax credit to the dealership, and in exchange, the dealer will either give them that much in cash or as a down payment toward the vehicle. 
• Dealers will register with the IRS and confirm that a vehicle qualifies for the tax credit, using the vehicle identification number.

To note: Low-income consumers will still struggle with new car affordability even with federal tax credit.

Concern re: Used Vehicles – There are still significant challenges for low-income consumers to access these credits since a small number of used ZEVs eligible for tax credits.  We need to be cautious on if/how it is promoted, especially due to future unknowns on how this impacts supply / availability of affordable ZEVs.

Discussion: There were a handful of questions on assurance measures and battery warranties. The battery warranty is not required by regulation at this time; however, as of model year 2026, the Advanced Clean Cars II regulations do include provisions to require automakers to include a minimum warranty on the battery of 8-years/100,000 miles. There will also be durability requirements on electric vehicles that protect the secondary market for these cars. More information on these measures, as well as the Advanced Clean Cars II regulations can be found on the Frequently Asked Questions page, linked here.

Return to ZEV Equity Task Force webpage