Tesla, Ford and GM win in electric vehicle tax credit change • TechCrunch

A few other EV models are now eligible for the federal EV tax credit, including GM’s Cadillac Lyric, Ford Mustang Mach-E and Tesla’s five-seat Model Y, thanks to a change from the US Treasury. .

The US Treasury Department updated the vehicle classification standard on Friday, revising a definition that determines which electric vehicles are eligible for clean vehicle tax credits available under the Inflation Reduction Act. The change, which automakers had lobbied the Biden administration for, boils down to one question: What makes a vehicle a sedan, SUV, crossover or wagon?

This classification is important because the federal tax credit had two different price caps. A car, sedan or station wagon would qualify if its price was $55,000 or less, while an SUV had a price cap of $80,000.

The Cut Inflation Act 2022, which was signed into law in August 2022, includes a complex set of requirements around which electric vehicles and other clean vehicles are eligible and ineligible for a tax credit of 7,500 $ for electric vehicles. The IRA amended the Qualified Plug-in Electric Drive Motor Vehicle Credit (also known as IRC 30D), which gave consumers up to $7,500 in tax credits for the purchase of a vehicle battery-electric and some plug-in hybrid vehicles. This reworked law, now called the Clean Vehicle Credit, includes a reduced credit of $4,000 for used electric vehicles and adds other clean vehicles into the mix, such as “qualified fuel cell vehicles.”

Eligibility for the tax credit is another matter. There are a number of factors that determine whether a vehicle will qualify for EV tax credits, including the income of the buyer, the price of the vehicle and where it was assembled. Under the new law, battery-electric SUVs had to cost $80,000 or less, and sedans.

The US Treasury said it updated the standard to make it easier for consumers to know which vehicles qualify for the applicable price cap. The agency will now use the EPA fuel economy labeling standard rather than the EPA CAFE standard. This is important because it means that crossover vehicles that share similar characteristics will be treated consistently. It will also align vehicle classifications under the Clean Vehicle Credit with the classification displayed on the vehicle label and on the consumer-facing FuelEconomy.gov website.

The result ? Vehicle models such as the Cadillac Lyric, which starts at $62,990, as well as the Ford Mustang Mach-E, which varies in price between $45,995 and $63,995 depending on the version, are now eligible for the tax credit of $7,500 for electric vehicles. Other vehicles now eligible include the five-seat Tesla Model Y.