Mitsubishi Outlander PHEV heads to market with no EV credit

The freshly inked Inflation Reduction Act could complicate the market prospects of a key Mitsubishi crossover set to arrive in the U.S. in late November.

The law, designed to spur domestic EV production and reduce reliance on foreign supply chains, alters the eligibility rules for a $7,500 federal EV tax credit. Automakers must now assemble EVs and plug-in hybrids in North America to qualify.

This means the Japan-made plug-in hybrid electrified Outlander loses eligibility for the federal incentive. That’s troublesome, as the small automaker struggles to maintain relevancy in the U.S.

Mitsubishi dealer Grant Petersen Jr. said the loss of the tax credit on the redesigned model is “concerning.”

In the near term, Mitsubishi will likely have to absorb some of that $7,500 and lower the compact crossover’s MSRP to keep it competitive, said Petersen, CEO of Bronco Motors Family of Dealerships, which operates Bronco Mitsubishi in suburban Boise in Idaho.

Mitsubishi Motors North America CEO Mark Chaffin acknowledged the loss and said the new EV incentive rules complicate product plans for the entire industry.

“There’s a lot more questions than answers right now,” Chaffin told Automotive News. “Like the rest of the OEMs, we’re waiting for further clarification and expecting to see the details that come out of the Department of Treasury later this year.”

Chaffin said the loss will not alter launch plans for the redesigned Outlander PHEV. But “mid-to-long-term, we’ll have to monitor market conditions and see where it goes,” he said.

Nor is Mitsubishi tweaking the Outlander PHEV’s pricing, which has not been disclosed.

“We remain confident that [losing the tax credit] won’t make a big difference in the sales success of this vehicle,” he said. “We think we’re going to have a hard time keeping up with the demand.”

Mitsubishi dealer Ryan Gremore said limited inventory at launch could blunt any adverse effect of a higher price on the Outlander PHEV.

“Demand will outweigh the supply,” said Gremore, president of O’Brien Auto Team in Normal, Ill.