News About the Canadian Deal That Will Improve VW Battery Production

What This Means for the Future of VW Electric Vehicles

According to the International Energy Agency (IEA), electric vehicle sales reached 6.6 million in 2021. In Q1 of 2022, sales of electric vehicles hit the benchmark of 2 million, which happens to be a 75% increase when compared to the same time period of the previous year. Statistically, EVs represent nearly nine percent of the vehicle market, and they’re only going to continue gaining ground in the coming years.

So, why exactly are new electric cars seeing such a surge in sales? Let’s break this down.

Why People Are Flocking to Electric Vehicles

There is indeed a large part of the car buying market that is concerned about the environmental impact of traditional vehicles. This demographic has been more than willing to make the switch. In fact, many of them were early adopters of electric vehicles.

However, as recently as the last two years, the nation has had to deal with a much more immediate problem – surging gas prices. In fact, some SUV and truck drivers were paying more than $100 for a tank of gas during the height of the price hike back in June. Considering how much gasoline was robbing families of their monthly budget, this made many folks seriously consider making the switch to an electric vehicle. Although the purchase of a new electric car means an upfront expense, it eventually results in long-term savings over the life of ownership.

Finally, the purchase of a new electric car means that there is a significant tax break via the Inflation Reduction Act of 2022 passed by the Biden administration. Based upon the vehicle’s traction battery capacity and the gross vehicle weight rating, car buyers receive up to a $7500 tax credit, drastically offsetting the price of the vehicle. However, that is going to change slightly moving forward.

The Future of the Electric Vehicle Tax Credit

Starting on January 1st, 2023, the tax credit on new electric cars will work a little bit differently. Instead of being one credit, the tax credit will consist of two separate credits that may potentially be combined. They break down as follows:

• Electric vehicles that meet the critical mineral requirements are eligible for a $3,750 tax credit.
• Electric vehicles that meet the battery component requirements are eligible for a $3,750 tax credit.
• Electric vehicles that meet both requirements are eligible for a $7,500 tax credit.

Currently, a VW electric car for sale does not qualify for either credit due to where it’s manufactured. EV battery materials must be sourced in North America, and the vehicles need to be assembled domestically as well. Fortunately, the Volkswagen Group is making the necessary arrangements to ensure that customers buying the VW ID.4 and subsequent electric vehicles in the EV lineup will be able to qualify for it.

The Canadian Deal and the VW Plant in Tennessee

Recently, Volkswagen signed a memorandum of understanding with the Canadian government. The goal is to source the required lithium, nickel, and cobalt used to make batteries for VW electric vehicles, thereby satisfying the tax credit requirement that materials be sourced in North America. Nothing is official quite yet, but this initial news looks promising for the automaker. Many experts believe that VW plans to build a dedicated Gigafactory to manufacture their electric vehicle batteries.

It’s also worth noting that Volkswagen plans to start the production of their electric vehicles in their plant in Chattanooga, TN. Pablo Di Si, the new president and CEO of the VW Group of America, has estimated that the plant will domestically manufacture at least 90,000 new electric cars. According to Di Si, every electric vehicle from the Tennessee plant will qualify for the tax credit.

Looking for a VW Electric Car for Sale? Visit VW Lee’s Summit – Your Local Volkswagen Dealer!

Now that you know a little more about what VW is doing regarding the future of their electric vehicles, the next step is to stop by VW Lee’s Summit so that you can test drive one for yourself. We currently have the award-winning VW ID.4 in stock and ready to test drive. In addition to its future-forward design and advanced feature package, the VW ID.4 can get up to 275 miles on a single charge (Pro model). Get in touch with our team at the dealership if you’d like to make an appointment.

Not yet in the market for a VW electric car for sale? No problem!

As the leading Volkswagen dealer in the Kansas City area, we carry a wide variety of new cars, used cars, and certified pre-owned vehicles that have undergone a 100+ point inspection. Additionally, we’re always running great deals on VW products and services and our specials section.

The best way to check out our vehicles is by visiting our dealership here at VW Lee’s Summit, conveniently located at 2225 NE Independence Ave in Lee’s Summit, MO. You can also give us a call at (816) 282-0022 or contact us via e-mail using the contact form on our website.

Need some financial help with the purchase of a new or used vehicle? Reach out to our finance department today about getting approved for your vehicle’s financing.

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