Volkswagen ID.4 is now one of the cheapest electric SUVs in the US as it gets full tax credit subsidy by the government
The U.S. Treasury Department has reviewed the ID.4 battery material sourcing documents that Volkswagen sent it, and determined that it will become the first foreign EV maker to get the full tax credit amount according to the Inflation Reduction Act's subsidy requirements. All the VW ID.4 trims - from the Standard to the Pro models - are now listed at the government's dedicated website as eligible for the full US$7,500 new EV tax credit amount.
Given that the base VW ID.4 starts from US$38,995, the government's deduction would bring its effective price down to the mouthwatering US$31,495. This makes VW ID.4 the cheapest electric SUV with faster charging abilities on the US market, beating the 55 kw Chevy Bolt EUV subcompact, and the base Hyundai Kona with its US$33,500 MSRP by a tad.
The standard ID.4 with 62 kWh battery offers 205 miles of range on a charge, while for five grand more one could get the Pro model with 82 kWh capacity. Only the electric Hyundai Kona is now in that same ballpark, but it doesn't qualify for subsidies as it is not made in the US.
Volkswagen, on the other hand, is quick to point out that the ID.4 is "assembled locally in Chattanooga, TN," thus fulfilling one of the made-in-US IRA requirements. "Your vehicle may be equipped with battery cells or modules supplied by either LG Energy Solution or SK On," adds VW, covering the battery material sourcing eligibility criteria.
With Volkswagen's inclusion in the new EV subsidy program, the Treasury aims to dissipate the negative global reaction to the Inflation Reduction Act's green subsidies. Korean and Japanese companies weren't happy that they will be excluded from the tax credit bonanza, while the European Union even wanted to mount a legal challenge to the IRA on unfair competition grounds before the WTO.
The US, however, inked separate battery material sourcing and production partnerships with the Asian governments, while gestures like the ID.4's tax credit approval aim to soothe its European partners, too. It remains to be seen if making the VW ID.4 one of the cheapest electric SUVs in the US will be enough for the Europeans, though, as some local companies - Volkswagen included - now consider relocating their planned battery factories to the US instead of Europe.