Ford Expects Mach-E Will Lose Federal Tax Credit

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Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

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, Automotive Editor - December 5, 2023
2023 Ford Mustang Mach-E

The Inflation Reduction Act (IRA) dramatically changed what vehicles are eligible for the electric vehicle federal tax credit. Things with the federal EV tax credit are set to change again on January 1, 2024, which could see the current roster of EVs that are eligible for the credit shrink. Ford expects the changes to result in the Mustang Mach-E losing its eligibility for any portion of the federal tax credit and has sent a heads up to its dealers.

In a bulletin that was sent to dealers this month, Ford stated: “While we are awaiting finalized requirements from the government, based on current information, it is unlikely that any Mustang Mach-Es will qualify for the Federal Tax Credit beginning on 1/1/24.”

Ford didn’t provide any clear information on why the Mustang Mach-E is losing its federal tax credit, but states that “qualified customers can currently receive $3,750, making this an excellent motivator to purchase before the end of the year. This is a great time to reach out to customers in your pipeline to close the sale and ensure they are able to receive the credit, provided they qualify, before the end of the year.”

As Ford points out, shoppers who have been waiting to purchase a Mach-E may want to get the ball rolling before the end of the year. After 2023, it looks like the electric SUV won’t be eligible for any portion of the tax credit, essentially becoming $3,750 more expensive.

2023 Ford Mustang Mach-E

The odd thing about the federal EV tax credit under the IRA is that shoppers can take advantage of the full $7,500 credit if they lease an EV. We’re not seeing any signs that Ford will stop shoppers from taking advantage of this loophole when a Mach-E is leased. For shoppers, leasing a Mach-E in 2024 may be a better option than purchasing one if they’re eligible for any portion of the $7,500 tax credit.

Based on our understanding of federal tax credit, the Mach-E is losing its eligibility because of a new rule that’s going into effect in 2024. Starting next year, electric vehicles with battery components that are sourced from countries that the U.S. government has designated to be “foreign entities of concern” will no longer be eligible for any portion of the federal tax credit. Foreign entities of concern currently include Russia, China, North Korea, and Iran.

Reports indicate that Ford currently uses LFP batteries from CATL, which is a Chinese battery manufacturer. That alone makes it ineligible for the federal tax credit under the rule changes in 2024. Because of this new rule, we could see quite a few EVs that currently meet the necessary requirements to be eligible for a portion or all of the federal tax credit lose their eligibility.

Interestingly, Ford doesn’t point toward the F-150 Lightning losing its federal EV tax credit eligibility in 2024. For trucks with an MSRP below $80,000, shoppers can get up to $7,500 through the tax credit. Ford is reportedly getting batteries for the F-150 Lightning through a joint venture with SK Innovation in Georgia.

Reports indicate that Ford is planning to open a facility in Marshall, Michigan where it would be able to manufacture its own LFP batteries for its EVs. This would make its electric vehicles cheaper, but, in theory at least, also eligible for the federal tax credit.

Pictured: 2023 Ford Mustang Mach-E

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, Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

Follow On: Twitter

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