Stellantis shares experienced a significant decline after some of its plug-in vehicles in its product range lost eligibility for tax credits in the United States. This “defeat” comes precisely due to new and stricter regulations introduced just this week.
Among the penalized models are also vehicles belonging to another major group, Volkswagen. For the German automaker, affected by this regulatory update, there’s the ID.4 electric crossover, which is no longer eligible for the full $7,500 tax credit, according to the latest list published by the Department of Energy and the Environmental Protection Agency.
Stellantis hit hard by loss of subsidies in the United States
Stellantis vehicles, such as the Jeep Wrangler and Grand Cherokee plug-in hybrids, which previously received up to $3,750, are excluded from the list. The regulatory change, as expected, had an immediate impact on stock markets. Stellantis shares fell 4.5% in Milan, while Volkswagen shares decreased by 1.4% in Frankfurt.
The vehicle reclassification is part of President Joe Biden‘s Inflation Reduction Act (IRA), which introduced stricter requirements on domestic sourcing of battery materials and components to qualify for credits. As a result, the number of eligible models, including those from Stellantis, has dropped to 18, compared to 22 last year.
Meanwhile, the automotive industry is facing growing challenges in the United States, especially in view of the political transition with Donald Trump, who has promised to dismantle some of Biden’s pro-electric vehicle policies and introduce new tariffs on imported cars. Complicating matters, Stellantis is facing numerous challenges, including delays in new model launches and excessive inventory in the U.S. market, which contributed to CEO Carlos Tavares’ resignation at the end of 2024.
Despite the success of the Chrysler Pacifica hybrid minivan, which maintained access to the full $7,500 credit, difficulties persist. The list of eligible vehicles could expand in the coming months, as some manufacturers have not yet submitted all required information to demonstrate compliance. With or without subsidies, however, new car buyers on both sides of the Atlantic are already dealing with issues related to their income and the price of a new vehicle, especially if electrified. The issue of access to tax benefits, therefore, is more important than ever.