With the holiday season in full swing, you might be in the mindset to buy something new. While electronics, toys and games are typically at the top of buyer’s checklists, there was once a time when automobiles were a hot-ticket item too. Luckily, there is some hope that shoppers can return to the car market for their gifting needs. As inventory shortages ease and 2023 car releases head way to dealerships across the nation, December might just be the return of car buying (at least for now). If you’ve got car shopping on the mind during the jolliest time of year, we’re here to help you navigate the process. One of the questions our editorial team gets asked most often: Is it time to buy an EV?
Our answer, not surprisingly, is it all really depends. In fact, you may just want to wait until after the holiday season is over.
Key takeaways:
- The Inflation Reduction Act will bring important tax incentives for electric vehicles in the new year.
- More middle-class shoppers will be able to afford electric vehicles by 2024.
- If you wait to shop in 2024, you can receive cash directly at the dealership versus waiting to file taxes.
The new tax credit goes into effect January 1st, 2023. Does that mean it’s time to buy an EV?
If you’ve been holding off on buying an electric model in recent years, many automotive experts are saying now is the time to buy. With electric vehicle production on the rise and a new tax credit set to take place, Americans are having one of the greatest opportunities to get behind the wheel of a greener alternative. And hopefully, at a lower cost than years past.
Generally speaking, the electric industry has been dominated by wealthier consumers, meaning other drivers who wanted to drive electric didn’t have the necessary funds to do so. Now, as the IRA imposes up to a $7,500 credit toward electric purchases, there is some optimism that more diversified buyers can officially make the switch to electric.
Restrictions to the tax credit
Before you jump out the door to your nearest dealership, there are a few things to know about the upcoming policy changes. Below we’ll break down the top limitations:
- To receive the full tax credit, the EV must be assembled here in North America as well as have the majority of its parts built on domestic soil.
- EVs are still limited in supply. Most automakers are putting shoppers on waitlists for months at a time.
- There are initial limitations (income restrictions and tax credit amounts) that will acquiesce in the next few years. Perhaps if you aren’t in a rush to buy something new, we’d recommend waiting.
Overall, the introduction of the federal tax credit for electric vehicles is a great start. As automakers transition to greener production, the reality of consumers affording theses models is becoming more achievable. Because some setbacks still exist, it’s not a bad idea to hold off on buying until at least 2024. By then, shoppers will have the easiest advantage of buying a green vehicle.