Rivian R2 Aims for Full $7,500 Tax Credit Amid EV Market Shake-Up

If you're contemplating buying Rivian's forthcoming R2 model as your first electric car, you might be wondering if the new EV would be eligible for the full federal tax credit in the United States, especially since the company's existing models no longer do.

Rivian CEO Confirmed Forthcoming R2 Car Is Eligible For Full $7,500 Federal EV Tax Credit

RJ Scaringe, Rivian's CEO, verified that the R2 will be eligible for the full $7,500 federal EV tax credit. At least, that is the plan, BGR reported. Scaringe spoke with Mad Money's Jim Cramer about Rivian's brand, its commercial agreement with Amazon, and the company's plans for the future.

During an interview, Cramer queried Scaringe about the current R1T and R1S prices. Both vehicles cost more than $70,000, putting them out of reach for the majority of buyers, so how could the firm compete with other automakers? Scaringe said that's where the R2 comes in, which, in addition to having a smaller form factor, will be substantially less expensive.

As previously reported, the R2 model is expected to cost between $40,000 and $50,000, rather than the $73,000 that the R1T now starts at. While Scaringe would not reveal pricing, he stated that "our next set of products, what we call creatively R2, will be smaller in terms of form factor but also have a much lower price point."

When asked how Rivian will handle the recent changes to the federal EV tax credit, which have reduced what the R1T and R1S now qualify for, Scarigne stated that "the R2 program was designed entirely around achieving the $7,500 tax credit." Of course, the R2 isn't expected to begin delivering to customers until 2026, giving plenty of time for the tax credit qualifications to change all over again.

Having that in mind, if the R2 costs $40,000, you might wind up having Rivian's next-generation car for $32,500, which represents an incredible deal for anyone looking to invest in the business. We'll see how that price plays out, but buyers should expect a lot more inexpensive adventure EVs from the firm in just a few years.

We might not have to wait long to get some of these issues answered. While it has not been formally announced, the corporation is anticipated to hold an event in Laguna Beach, California, on March 7, according to records disclosed during a recent city council meeting. According to the municipal application, Rivian intends to display a variety of cars during the event, implying that this is likely to be the long-awaited R2 unveiling.

We may also know what to expect from the R2's design. A recent patent application for a new light attachment shows off what seems to be the R1T, as well as an SUV that looks a bit different from the R1S – in fact, it may be the R2 design, which the firm previewed in a Q&A video last year.

New 2024 Rule: Obtain EV Tax Credits At The Dealership

If you're considering purchasing an electric vehicle, a new law will go into effect in 2024 that will help you save money. Starting January 1, 2024, electric vehicle (EV) customers will be able to have their EV tax credit applied at the point of sale by the dealership.

As part of the Inflation Reduction Act, the federal government is providing EV tax credits for both new and used electric cars. Depending on the car you buy, a new EV might qualify for a $7,500 tax credit, while a used EV could receive a tax credit of up to $4,000 (or 30% of the sale price, whichever is less).

However, unlike certain tax credits, which need you to wait until you submit your taxes to receive the money, the EV tax credit is now easier to obtain. According to a new IRS regulation, effective January 1, 2024, the EV tax credit ("Clean Vehicle Tax Credit") must be approved and triggered at the time of vehicle sale. That means you can receive your EV tax credit immediately after purchasing your vehicle, similar to an instant refund.

This new IRS regulation makes it much easier to obtain the EV tax credit since the dealer will file documentation indicating which tax credit your EV is eligible for, and you do not have to wait until you file your taxes. The EV tax credit is applied to the cost of your vehicle purchase. And because the dealership must register with the IRS and complete the paperwork, they will assist you in determining which vehicles are eligible for what amount of tax credits.

How EV Tax Credits Apply To New Automobiles?

Some EV tax benefits are tricky, particularly for new EVs. As of 2024, few new EVs qualify for the full $7,500 tax credit, which is only available for vehicles with final assembly in North America and battery components sourced from the United States or specified U.S. trade partner nations. The automobile must have a maximum MSRP:

• $80,000 for pickup trucks, SUVs, and vans
• $55,000 for other electric vehicles

Your income (modified adjusted gross income) cannot exceed $300,000 for married couples filing jointly, $225,000 for heads of households, or $150,000 for all other filers.

If you're not sure whether automobiles qualify for a new EV tax credit, this new regulation concerning immediate tax credits at the dealership may assist you. It's in the dealer's best interest to help you receive the proper amount of EV tax credit. In addition, even if their vehicles do not qualify for the EV tax credit, several automakers are providing hefty dealer discounts. Because new EVs may require more expensive auto insurance, obtaining a larger discount on your new EV might be a wise financial decision.

For example, as of mid-January 2024, various automakers, including Cadillac, Hyundai, and Kia, were providing special incentives and discounts of up to $7,500 per electric car. Even if your preferred EV is not eligible for the new EV tax credit, the car manufacturer or your local dealer may reduce its costs to match it.

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