The U.S. Treasury announced on Friday that they are making more “SUVs” in vehicles from Tesla, Ford Motor, General Motors, and Volkswagen electric vehicles eligible for up to $7,500 tax credits.
$7,500 Tax Credits Will Be Given To SUV Electric Vehicle Owners, U.S. Treasury Says! (PHOTO: PBS)
SUVs Electric Vehicles In The US
The Treasury Department consider making more SUVs electric vehicles including SUVs made by Tesla, Ford, General Motors, and Volkswagen to be eligible for the federal tax credits of up to $7,500 under new vehicle classification definitions.
The revised standards for SUVs’ electric vehicle tax credits follow lobbying by automakers that had pressed the Biden administration to change vehicle definitions to allow higher-priced vehicles to qualify for a maximum tax credit. The CEO of Tesla Elon Musk met with top aides to President Joe Biden to discuss the EV industry and the broader goals of electrification last week.
Biden administration’s Inflation Reduction Act
The sweeping climate law was approved last summer as part of the Biden administration’s $437 billion Inflation Reduction Act. Under the bill, SUVs electric vehicles can be priced at up to $80,000 to qualify for EV tax credits, while cars, sedans, and wagons have to be priced at or under $55,000. Moreover, The Treasury announcement allows vehicle automakers to consider crossover SUVs to qualify for credits. The decision increases the retail price cap to $80,000 from $55,000 for GM’s Cadillac Lyriq, Tesla’s five-seat Model Y, Volkswagen’s ID.4, the Ford Mustang Mach-E, and Escape Plug-in Hybrid. Only one version of the VW 1D.4 had been approved as an SUV by the Treasury.
The Treasury had said in December it would use Environmental Protection Agency (EPA) CAFE standards to identify whether a vehicle was a car or SUV for EV tax credit purposes but will now utilize the “consumer-facing EPA Fuel Economy Labeling standard. However, Elon Musk the Tesla Chief Executive tweeted last month that the SUV electric vehicle tax regulations were “messed up.” The five-seat version of the Tesla Model Y is not considered an SUV, while the Model Y seven-seat version is considered an SUV electric vehicle and is eligible for credit.
Musk raised the topic with White House officials during last week’s meeting, a person briefed on the matter said. The Treasury said the modified definition will apply to EV purchases since January 1. In December, according to Treasury stated that it will not issue proposed guidance on battery sourcing rules until March, effectively providing some SUVs electric vehicles not meeting new requirements a few months of eligibility in 2023 before the battery regulations take effect and drawing outrage from Senator Joe Manchin. It repeated the timeline Friday.
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