If you've read part 1. of charging your electric vehicle, then you now know the benefits of charging at home. In part 2, we will focus on Credits, Used EV Vehicles, and Requirements. If you have stumbled upon part 2 first, you can read part 1 here.
President Biden signed the Inflation Reduction Act (IRA) into law on August 16 which includes the Clean Vehicle Credit for new and used EVs and qualifying plug-in hybrids.
Americans can get a $7,500 tax credit for buying a new EV or a $4,000 tax credit for buying a used EV (up to 30% of the price).
Clean Vehicle Credit Incentives
Many do not know that the tax credit can be transferred to the dealer at the point of sale. Meaning, unlike traditional credits where one may have to wait to use the credit when you file taxes, you can use the tax credit to reduce the purchase price of the EV right then and there when purchasing.
The Clean Vehicle credit will be in effect for 10 years beginning on January 1, 2023, but keep in mind: Not all EVs and buyers qualify, consult a tax professional with questions about the Clean Vehicle tax credit.
Let’s look at some of the qualification requirements.
- Used Vehicle Eligibility: Used EVs must be sold by a dealer (no Craigslist, Facebook Market, etc owner to owner deals) and the credit only applies to the first time it is resold, based on its VIN number.
- Income Limits: The Clean Vehicle credit is designed to help make EVs accessible to a larger population of Americans – not necessarily to help buyers that can already afford them. So, the IRA includes income limits to qualify for the tax credit. The maximum income to qualify for the $7,500 new EV credit is $150,000 per year, or $300,000 for joint filers. In order to qualify for the $4,000 used EV tax credit, the maximum income is $75,000 per year or $150,000 for joint filers.
- Price Limits: In addition to income limits, there are price limits on the vehicles that qualify for the Clean Vehicle credit based on the manufacturer’s suggested retail price (MSRP).
- The Clean Vehicle Credit price limits are:
- $80,000 for new SUVs, pickups, and vans
- $55,000 for new sedans
- $25,000 for used EVs
- Again, the point is to help everyday Americans trade in their gas-powered car for EVs, not reward hedge fund managers for pre-ordering Electric Hummers.
- The Clean Vehicle Credit price limits are:
Manufacturing Requirements
Finally, there are manufacturing requirements designed to encourage local sourcing, manufacturing, and recycling, mostly for battery components.
Effective immediately, the IRA requires final assembly for eligible EVs to take place in North America.
As of January 1, 2023, eligible EVs must have 50% of battery components made or assembled in North America. This requirement steps up each year until reaching 100% in 2029.
The IRA also requires that a certain percentage of battery minerals come from free trade partners or are recycled in North America. The threshold starts at 40% in 2023 and gradually increases to 80% by 2027.
These requirements will do two things:
- Limit the number of EVs that qualify for the Clean Vehicle credit
- Super-charge local EV and battery manufacturing, recycling, and technology
Which EVs Qualify for the Clean Vehicle Credit?
In March 2023, the US Treasury Department released guidance for the EV tax credit, giving us a good idea of which vehicles will be eligible in 2023.
Based on this guidance, the Department of Energy released a list of eligible vehicles, new and used, on fueleconomy.gov. which you can view here.
It is good to know that even if the vehicle you want doesn’t qualify for a tax credit, the average driver will still save thousands of dollars per year on fuel alone by charging an EV at home compared to paying for gas.
FAQ on Charging Your EV at Home
How Much Does an EV Charging Station Cost?
Prices vary per the level of the charging stations. Unfortunately, the IRA doesn’t have specific incentives for EV chargers. But it does offer incentives for upgrading your wiring and electric panel, which may be necessary when adding a charging station. It is good to know that charging an EV with solar panels instead of grid energy the average driver will recoup that cost of a typical Level 1 or 2 charger within two to six years.
Should I Buy Solar Panels or an EV First?
To complete the EV solar charging trifecta you’re going to need – you guessed it – solar panels.
Whether you already have a home solar system or not, you’ll almost certainly need to add some panels to power your EV – it’s just a matter of how many. The good news is that the IRA increased the solar tax credit to 30% for the next 10 years, which puts a substantial dent in the cost. You can speak with one of our solar advisor's and get a hassle-free quote by clicking here.
How Many Solar Panels Does It Take To Charge an EV?
If you already have solar before you get an EV, great!
What you’ll likely find is that until you add panels to account for your EV usage, your solar system won’t completely offset your electricity usage, and you may end up with an electricity bill at the end of the year.
There are two ways to fix this:
- Get a couple of months’ worth of data to know exactly how much extra solar capacity you need.
- Work with a Solar Advisor to estimate how many additional panels you’ll need to offset your EV usage.
Your solar advisor will figure of how many solar panels it takes to charge an EV.
If you get an EV before you have solar, no worries.
In this scenario, it’s recommended to take a few months to establish your EV battery usage and its effect on your energy bill. Having a solid set of data will help solar installers make a precise calculation of how much solar you need to offset your electricity usage.
The exact amount of panels required to charge an EV with solar depends on type of panel, EV battery size, distance traveled, and the amount of sun exposure. But in general, it takes between 5 and 12 panels to charge an EV entirely on solar power (perhaps less if you work from home).
Should I Charge My EV With Solar Panels?
You should charge your EV with solar panels only if you want the cheapest, cleanest, and most convenient driving experience possible.
In other words… yes.
The obvious hurdle is upfront cost for both EVs and solar panels. However, the IRA created very good incentives for both things, including a $7,500 tax credit for new EVs and 30% tax credit for solar and battery, which can help soften the blow as mentioned earlier.
Here’s the other way to look at it: Charging your EV with solar costs about 50% less than charging with grid power and at least 75% less than public charging or gas. All you’re doing is buying 25+ years’ worth of fuel at once for a significant discount – just like buying bulk at Costco.
Solar panels are a cost-effective way to fuel your electric car and may require anywhere from 5 to 12 solar panels. You can use the averages above as a benchmark when doing your own analysis, and if you ever need help do not hesitate to talk with one of our solar advisors today!
Pieces of this article are from solar.com