More crossover SUVs will qualify for the electric vehicle (EV) tax credit after an announcement from the Biden administration.
Key Details
- General Motors and Stellantis officials have been lobbying for changes to the EV tax credit issued last year.
- While the tax credit was intended to incentivize EV purchases, many popular EV models were excluded from the legislation.
- This change came about by redefining what vehicles are considered sport-utility.
- The Inflation Reduction Act initially provided a tax credit to SUVs priced above $80,000. Passenger-car customers did not receive a credit if the vehicle cost less than $55,0000.
- The change is retroactive to January 1, allowing buyers who already made a purchase to claim the credit.
Why it’s news
Before this change, models like GM’s Cadillac Lyriq, Ford’s Mustang Mach-E, and Tesla’s Model Y did not qualify for the credit. These models are priced more reasonably for the average consumer, though they remain more expensive than a gasoline car.
The redefinition allows more consumers to access the tax credits, making them more likely to make a purchase. More vehicles like Ford’s Escape Plug-in Hybrid SUV and Volkswagen AG’s ID.4 are now eligible for the credit.
Alliance for Automotive Innovation president John Bozzella called the change “a very good decision that clears up some EV tax credit confusion and instantly helps customers shopping today (and tomorrow) for an electric crossover or SUV.”
More changes could be on the way as the Treasury has indicated it has plans to publish new requirements for EV batteries. These changes could disqualify some of the models that the most recent changes make eligible.
Backing up a bit
West Virginia Senator Joe Manchin has been an outspoken critic of the tax incentives since they passed last year. Just last week, Manchin attempted to delay the credits, arguing that the current guidelines would let European manufacturers circumvent regulations requiring a certain portion of EV battery manufacturing in the U.S.
President Joe Biden has admitted that there are “glitches” in the EV legislation but added that changes could be made to correct issues.
Manchin’s bill asks the Treasury Department to deny credits to buyers whose vehicles don’t meet the battery requirements.
