My Ordered EV No Longer Qualifies For The Tax Credit! What Other Car Should I Buy?

Image: VW

Sam ordered a VW ID.4 EV, but due to the Inflation Reduction Act, that car is now disqualified from the tax credit making the effective cost $50,000. Despite the EV benefits he is considering a gas or hybrid family car that will be a bit less expensive. What car should he buy?

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Here is the scenario:

Hello! My wife and I are on the search for a family-mobile. We have a 2-year-old son and a baby on the way in December. Our CPO 2017 BMW X1 has treated us well, but we need a car that will fit two car seats without having to move the driver’s side seat forward (I’m a bit over 6 ft tall). We’ve enjoyed the premium trim of the BMW, tight-ish suspension and sport feel, and the surprisingly good gas mileage.

I was sure I would be getting an electric car this time around, and in fact we ordered a VW ID.4 all the way back in January 2022. It is actually sitting at the dealer right at this moment, and we are deciding if we really want it. We are unlucky in the sense that our 2022 model-year ID.4 was built in Germany, and so with the Inflation Reduction Act no longer qualifies for the $7500 credit. So effectively, the car went from 43k to 50k and we find ourselves, ironically, looking at cheaper ICE cars.

We want a biig enough rear row to comfortably fit 2 car seats without compromising front-row comfort. Sporty and premium feel. Would love a PHEV with at least some pure-electric range. Mileage less than 40k, ideally with some original warranty left or a CPO warranty?

In summary –

Needs to be AWD/4WD and auto trans

Needs to be very safe, we’re carrying babies here.

Needs to fit 2 car seats without compromising front-row comfort.

We can go up to $45k for a great fit.

Quick Facts:

Budget: up to $45,000

Location: Chappaqua, NY

Daily Driver: Yes

Wants: AWD, good for family, premium feel

Doesn’t want: Something too small

Expert 1: Tom McParland — Consider The Big Picture

Image: Subaru

So one of the consequences of the Inflation Reduction Act in regards to electric vehicles is that, due to the final assembly clause, it has actually discouraged buyers from buying an EV. If the car you planned to buy is now suddenly going to cost $7,500 more, folks are likely to go elsewhere. In your case, Sam, the best option may actually be to stay the course and keep the ID.4 despite the price jump. If you have a budget of $45,000 for gas or hybrid car, the fuel savings overtime on the EV is likely to close that gap.

If you are going to pivot to something else, you should get something substantially cheaper than the ID.4 so that you buffer for fuel costs. If this is the route you want to go, get yourself a Subaru Outback, as it will check almost all your boxes. The AWD system is top-notch, Subarus are constantly ranked as some of the safest cars you can buy and the longer wagon body style should give you some more leg room to accommodate for car seats. It won’t be as “sporty” as your X1, but neither will the ID.4 despite its German engineering.

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An Outback Limited starts at about $36,000. That’s $14,000 less than the VW EV. If you drive 10,000 miles a year and average about 30 MPG, assuming an average gas cost of $4.00/gal, that’s a yearly fuel cost of around $1,400. It would have taken you 10 years with the VW EV to get to the break-even point, and I would imagine you would have moved on to a different car by then.

The added bonus to the Outback is if you decide after a few years that you do want to make the move to an EV, the Subaru will hold its value very well giving you some solid equity for a trade-in. Within 100 miles of you, there are about 200 brand-new Outback Limiteds for sale, so chances are good you can find something in the short term.

Expert 2: Andy Kalmowitz — The Swedish Hybrid Meatball

Photo: Koons Volvo Cars White Marsh

That’s a real crap situation you got put in here, but you actually may be dodging a bullet. The interior functionality of the ID.4 leaves, let’s say, a bit to be desired. But don’t worry. I’ve got the perfect vehicle for you, my screwed-over friend.

I give you the Volvo XC60 T8. It’s a plug-in hybrid. It’s got a supercharger. It’s got a turbocharger. It’s got everything. The XC60 T8 — quite literally — ticks off every single one of your boxes. It’s a great daily driver. It’s got a hybrid drivetrain. It’s very premium. It’ll feel sporty enough for what you’re looking for, and it’s got a great all-wheel drive system. On top of all that, it’s very pretty. Oh, and the interior will be a helluva lot better than that ID.4.

It’s not terribly easy to find one of these in the budget you laid out, because there weren’t cheap when they first came out. However, because I am very talented, I found one anyway. This right here is a loaded-to-the-gills 2018 XC60 T8 that is located within 200 miles of you. It’s certified preowned with a very clean history report and even cleaner body. It may be at the tippy top of your budget, but it’s well under the mileage you specified and, to me, it’s worth the price!

My friend, look no further. the 2018 Volvo XC60 T8 is the vehicle for you.

Expert 3: Collin Woodard — No Crossover Necessary

Photo: Premium Auto House

In general, I agree with Tom. Whether it’s the ID.4 or another electric crossover, spending more for an EV may end up saving you money in the long run. Then again, I don’t know how much you drive or what the math would look like in your particular situation. So let’s go with a plug-in hybrid.

Specifically, a BMW 530e xDrive iPerformance. It’s big. It’s sporty. It’s luxurious. It has all-wheel drive. And yes, it’s also a plug-in. Some people will tell you to get a crossover for the kids, but surely, you can fit two car seats in the back of this luxury sporting sedan. They deserve it. You deserve it.

The one downside to this suggestion is that finding one in your price range may require a little bit of hunting. But here’s a 2020 model in New Hampshire for a hair under $41,000 with less than 40,000 miles on it. According to the dealer’s site, it’s also still under the factory warranty. What more could you ask for?

Expert 4: Lawrence Hodge — The New Kid On The Block

Image: Lexus

Personally, I think you should go for the crossover route. You have a growing family, so you’re going to need room. And yes, it sucks a lot of EVs are way too expensive right now, especially without the tax credit. But if you’re willing, you can still find a good vehicle in a hybrid. Take the new Lexus NX350h.

Mind you what I’m suggesting is a new vehicle, so you’ll have the full warranty and everything that comes with it. The NX was recently redesigned so it’s fully updated with all the latest tech and styling cues. With the hybrid model, you get 239 combined horsepower from its I4 and combined electric motors. But what’s important is how efficient it is. Even with all-wheel drive, you can expect to get 39 city/41 highway/37 combined which is pretty impressive. And it fits within your budget. I found one over in Connecticut. But with the market the way it is you’d have to act fast to get your hands on one, unfortunately.

Expert 5: Erik Shilling — Bolt to the Future

Photo: Chevy

May I suggest something obvious, so obvious that you’ve probably already considered it? Get a Chevy Bolt EUV! It still seems a bit nebulous but they should qualify for the tax credit with the Inflation Reduction Act, when they didn’t before. Please consult a tax professional on this point, however.

Regardless, a Bolt EUV is a perfectly fine car in the way that most EVs will be someday: it moves and is largely safe. You won’t have to think about it much, except to occasionally get new tires and brakes. You can also get a Bolt EUV (as long as its in stock) with all of the options for less than $45,000.

Further, considering that you were already about to buy a Volkswagen ID.4, it seems that you don’t value buying something off-the-beaten track or “interesting,” which the Bolt definitely is not. I mean that in a good way, as regular car ownership is underrated. Car Talk’s own Ray Magliozzi used to say it all the time and he is right: Cars, for most people, are just appliances.