VIDEO: Electric car popularity
(CBS) - At the New York International Auto Show, electric cars are taking center stage again this year. But buying an EV could soon be a little more costly and complicated due to impending changes in tax subsidies.
On the convention center floor in New York City, automakers are rolling out more electric models than ever. Hyundai's IONIQ 6 won the show's top prize, named 'World Car of the Year.' It is an all-electric model that starts at $45,500 and can travel up to 361 miles on a charge.
In the U.S., electric car sales are increasing even as overall new car sales are down.
Americans bought 809,739 electric vehicles in 2022 according to Kelley Blue Book. While that is still a small fraction of overall sales, it is a 65% increase compared to 2021.
Cox Automotive forecasts that total EV sales will reach 1 million this year.
But that surge in electric demand comes as the list of cars that qualify for federal tax credits is expected to shrink, at least in the near-term.
Currently, most electric buyers receive federal tax credits of up to $7,500, but in mid-April new rules will kick in under the Inflation Reduction Act.
They are intended to boost domestic EV production, so EVs that are built overseas or even domestic brands with certain imported components will no longer qualify for full credits.
"If you have your eye on an EV and you know it's eligible for the full federal credit, you have a few days left to go down to the dealership," said Kristen Lee, a journalist who covers the car industry for MotorTrend.
The list of electric vehicles that will qualify for full federal tax credits under the new rules is expected to be released April 18th.
Lee said local dealerships and manufacturers will help consumers navigate the shift, as the tax credit remains a selling point.
Tesla has already said it anticipates that the tax credit will be reduced for some versions of the popular Model 3.
"Some cars will remain eligible. Some cars won't be eligible. Some will be eligible for a partial credit," said Lee.
Lee doesn't expect that the loss of the credit will impact sales. EVs remain priced mostly as luxury vehicles, and she thinks that the loss of the credit won't be a deal-breaker for buyers.
The tax changes aren't expected to slow production of EVs either, as nearly all major automakers have focused on battery-powered electric technology as their road ahead beyond combustion engines.
