Kia Plug-In Vehicles Lose Eligibility For U.S. Federal Tax Credit

A large number of car buyers were forced to reconsider their options and or sign sales agreements for vehicles they may still be waiting on since the new bill was passed. The amount of stress and confusion this situation created is hard to measure, but it is perhaps sufficient to say it was not ideal and quite a hassle for all of those impacted. Manufacturers, including Kia, did reach out to their dealer networks to encourage them to try and complete sales agreements that would allow as many people as possible to secure access to the previous tax incentive before the new one replaced it on Tuesday this week. According to InsideEVs, Kia called out the sudden change in plug-in vehicle tax incentives for the U.S. market as “very disruptive to our business and unfortunately for our customers”, and they weren’t the only automaker to do so.

Given the restrictions on eligibility that the new law imposes, which becomes more restrictive over time, Green Car Reports has suggested that only 14 vehicles on sale at the start of 2023 will be eligible for the incentive the IRA has now established. 8 of those vehicles are electric vehicles (EVs) and 6 are plug-in hybrids (PHEVs). Only 2 of these 14 models are from foreign brands (Nissan and VW), though one might say that Chrysler and Jeep are foreign brands since they are part of the Stellantis conglomerate that formed when Fiat Chrysler merged with the PSA Group last year. Sadly for U.S. consumers, the IRA greatly reduces the up front affordability of many plug-in vehicle options since automakers like Kia and Hyundai currently offer the largest selection of EVs as well as PHEVs at price points close to or below the average price of a new vehicle.

While the intention of the IRA is to spur more investment in U.S. based manufacturing and employment, and certainly more vehicle choices that are eligible for the incentive are coming to market eventually, it is possible that the IRA will not achieve these goals, or at least not as rapidly as it could. This could be the case if manufacturers are unable to quickly take actions to move manufacturing and materials sourcing to the U.S. and free trade partner countries. Then again, Tesla lost its eligibility for the previous tax incentive in 2019 and it did not seem to slow down their sales by any appreciable amount. Tesla is in a class by itself though, considering all of its brand clout, dominance in the supply chain and logistics, technological savvy, and the critical “super charging” infrastructure they have pioneered.

To try and get a limited sense for how this new law and the sudden loss of incentives impacted U.S. plug-in vehicle shoppers, I asked people on social media how this might have impacted their decisions. I got several responses in the span of a few hours. Here’s a breakdown of what people said in answers to my questions about how the loss of the incentive may have impacted their decision on whether to continue to pursue a Kia purchase or to consider other options:

9 respondents said they likely would not consider the same Kia plug-in vehicle. They would choose either another EV or PHEV that still qualifies for an incentive, they would choose a regular hybrid or gas powered vehicle that wasn’t eligible for incentives in the first place, or they may still consider one if the fuel savings worked out vs. other options both plug-in and non plug-in. It all came down to the numbers for these people and without the incentive, they weren’t interested or they were much less likely to buy depending on the calculus involved.

5 respondents said they would still consider a Kia plug-in or other vehicle that didn’t qualify for the incentives because either it wasn’t about the incentive in the first place, or because they still want the features of the plug-in vehicle, regardless of price, or they felt like the math would work out well enough in their cases.

What would you do in this situation? Are you looking forward to the outcomes of the new IRA incentives, or do you think there are flaws in the new federal approach to encouraging more plug-in vehicle sales? Please leave your comments or questions below.

Images courtesy of Kia and Justin Hart.

Justin Hart has owned and driven electric vehicles for over 14 years, including a first generation Nissan LEAF, second generation Chevy Volt, Tesla Model 3, an electric bicycle and most recently a Kia Sorento PHEV. He is also an avid SUP rider, poet, photographer and wine lover. He enjoys taking long EV and PHEV road trips to beautiful and serene places with the people he loves. Follow Justin on Twitter for daily KIA EV news coverage.