Tesla’s highly anticipated Cybertruck is now eligible for up to $7,500 in federal tax credits under the revised rules of the Inflation Reduction Act, marking a significant boost for potential buyers of the electric pickup. These updated regulations, effective January 1, 2025, reflect a tightening of domestic sourcing requirements for EV battery components and raw materials, leading to changes in the list of eligible electric vehicles.
Cybertruck Joins Select EV Models Qualifying for Tax Credits
The Cybertruck is one of four Tesla models that meet the revised criteria, alongside electric vehicles from nine other brands, including:
- Hyundai Motor Co.: Ioniq 5 and Ioniq 9
- Kia Corp.: EV6 and EV9
Other brands like Ford, Nissan, and Rivian still have some qualifying vehicles, though several previously eligible models have lost their full or partial credits. Volkswagen’s ID.4, for example, is no longer eligible for the $7,500 credit, reflecting the stricter requirements under the new rules.
Tighter Rules Under the Inflation Reduction Act
The credit revisions stem from President Joe Biden’s Inflation Reduction Act, which mandates that a significant portion of EV battery components and raw materials must be sourced domestically or from trade partners. This move aims to bolster domestic manufacturing and reduce reliance on overseas suppliers, particularly in critical materials like lithium, cobalt, and nickel.
As a result, the number of EV and plug-in hybrid models eligible for the tax credit has dropped from 22 in 2024 to 18 in 2025, according to the Department of Energy and the Environmental Protection Agency.
Eligibility Criteria: Income and Price Caps
In addition to the stricter sourcing requirements, buyers must navigate income and vehicle price caps to qualify for the subsidy. These limitations ensure the credits are directed toward middle-income households and moderately priced vehicles, rather than luxury EVs.
Tesla Cybertruck Headlines Amid Controversy
The announcement of the Cybertruck’s tax credit eligibility coincided with an unrelated incident involving the vehicle. A Cybertruck exploded outside the Trump Las Vegas Hotel on Wednesday, leading authorities to investigate the event as a potential act of terror. While unrelated to the tax credit news, the incident has drawn significant attention to Tesla’s latest model.
Challenges for EV Adoption
The revised subsidy rules come as demand for battery-electric vehicles softens in some segments. Adding to the complexity, President-elect Donald Trump has expressed opposition to federal EV subsidies, threatening to end the program altogether after his inauguration later this month. This uncertainty creates a challenging environment for automakers and prospective buyers alike.