Businesses and tax-exempt organizations are eligible for the 45W Commercial Clean Vehicle Credit. - Photo: Automotive Fleet

Businesses and tax-exempt organizations are eligible for the 45W Commercial Clean Vehicle Credit.

Photo: Automotive Fleet

Navigating electric vehicle (EV) tax credits can be tricky for commercial fleets, with qualifications, requirements on materials sourcing and eligibility all subject to interpretation. These credits enhance the total cost of ownership (TCO) of EVs, making switching to electric even more attractive.

Moreover, the U.S. Department of the Treasury and the IRS announced the final rule for the 30D credit in May 2024. More on that in a moment.

What complicates things further is divining which vehicles that may no longer qualify for the 30D credit but DO still qualify for 45W, the Commercial Clean Vehicle Credit.

Here is a sample list of vehicles that are excellent for fleet applications that are still eligible for the 45W tax credit, per the U.S. Department of Energy's Office of Energy Efficiency & Renewable Energy:

  • Ford E-Transit
  • Ford Mustang Mach-E
  • Hyundai Ioniq 5
  • Hyundai Ioniq 6
  • Hyundai Kona Electric
  • KIA EV6
  • KIA Niro Electric
  • Nissan ARIYA
  • Polestar 2
  • Tesla Model 3 RWD*
  • Tesla Model 3 Long Range AWD*
  • Toyota bz4x
  • Volvo C40 Recharge
  • Volvo XC40 Recharge

*Only the Tesla Model 3 Performance still qualifies for the 30D credit.

What You Need to Know about the 45W Credit

Want to learn more about the ins and outs of the 45W credit? Here’s a quick summary of its stipulations:

Who Qualifies: Businesses and tax-exempt organizations
-No limit to the credits that can be claimed
-The credit is non-refundable; however, unused credits may be carried forward for up to 20 years

Credit Amount:

  • For qualifying vehicles with a GVWR less than 14,000 lbs.: the lesser of (a) 30% of cost; (b) “incremental cost”; and (c) $7,500. The IRS has issued safe harbor guidance for the 2024 tax year which provides for an “incremental cost” of at least $7,500 for most applicable vehicles.
  • For qualifying vehicles with a GVWR greater than 14,000 pounds: the lesser of (a) 30% of cost; (b) “incremental cost”; and (c) $40,000

Qualified Vehicles:

  • The specific vehicle cannot have already taken a credit under 30D or 45W (no double-dipping)
  • Cannot be purchased for resale
  • Must be made by a qualified OEM (OEMs must submit information to the program, so if your target manufacturer is missing, this is likely why)
  • There are no critical mineral or battery component requirements. If it’s an EV with a battery capacity of 7 kWh/15 kWh (depending on GVWR), it qualifies!

Updates to the 30D Credit

In May 2024, the U.S. Department of the Treasury and the IRS announced the final rule for the 30D Clean Vehicle Tax Credit program. It continues to exclude EV models that contain any battery components manufactured or assembled by a foreign entity of concern (FEOC) starting in 2025 — including China, Russia, Iran, and North Korea.  

The rule relaxes some requirements for critical minerals and battery components through 2027, giving OEMs more time to trace the origin of current mineral sources and move the sourcing and component manufacturing to the U.S. when feasible. The 30D credit will continue to scale as follows: 

  • The 50% critical minerals requirement (battery minerals must be extracted and processed in the U.S. or from a country with which the US has a free trade agreement) increases to 60% in 2025, 70% in 2026, and will top out at 80% in 2027. 
  • The 60% battery components requirement will increase to 70% in 2026, 80% in 2027, 90% in 2028, and require 100% from 2029 onward. 

Automakers have a limited window to comply with the updates to the 30D Credit. For example, the base trim Tesla Model 3 (standard range) currently uses a Chinese-sourced battery pack, making it ineligible to receive the 30D credit starting in 2025.  

Remember though, these requirements do not apply to fleet vehicles under Section 45W, but it gives consumers more time to purchase EVs that would have otherwise been ineligible for the 30D credit next year. 

Disclaimer: This article is meant to be informative and educational only and does not constitute tax advice.

Editor's Note: This article was updated in May 2024, after the U.S. Department of the Treasury and the IRS announced the final rule for the 30D Clean Vehicle Tax Credit program.

This article was authored and edited according to Automotive Fleet's editorial standards and style. Opinions expressed may not reflect that of Automotive Fleet.

Maria Neve is Vice President, eFMC Services at Inspiration Mobility. As VP, eFMC Services, Neve leads the development and growth of the company’s EV-first suite of services that delivers traditional fleet management company services, and new solutions designed for EV fleets, including Charging-as-a-Service, at-home charging and reimbursement, and more.

Prior to Inspiration, Neve served as Vice President, Electrification and Sustainability at Wheels, and led critical fleet management and sales functions for Merchants Fleet. Neve currently serves as Senior Vice President of NAFA Fleet Management Association. She holds a BA from The George Washington University.