Rules Change for EV Tax Credits

Automakers lobbied for higher-priced models to be included
By Newser Editors and Wire Services
Posted Feb 3, 2023 3:45 PM CST
Rules Change for EV Tax Credits
President Biden drives a Cadillac Lyriq at the Detroit Auto Show last September in Detroit.   (AP Photo/Evan Vucci, File)

The Treasury Department said Friday it is making more electric vehicles—including SUVs made by Tesla, Ford, and General Motors—eligible for tax credits of up to $7,500 under new vehicle classification definitions. The revised standards for EV tax credits follow lobbying by automakers that had pressed the Biden administration to change vehicle definitions to allow higher-priced vehicles to qualify, the AP reports. Tesla CEO Elon Musk met with top aides to President Biden last week to discuss the EV industry and the broader goals of electrification.

Under the sweeping climate law approved last summer, pickup trucks, SUVs, and vans with a sticker price up to $80,000 qualify for EV tax credits, while new electric cars, sedans, and wagons can only be priced up to $55,000. The rule had disqualified some higher-priced EVs, prompting complaints from Tesla and other automakers. Ford and market leader Tesla both said in recent weeks that they are cutting prices on some EVs, in part to qualify for the new federal tax credit and spur buyer interest. The Treasury Department said Friday that it hopes to make it easier for consumers to know which vehicles qualify for the credit. A complex web of requirements has cast doubt on whether buyers can receive the full $7,500 credit.

Under the revised rule, vehicle classifications will be determined by a consumer-facing fuel economy labeling standard, rather than a more complicated formula set by the Environmental Protection Agency, Treasury said. The change "will allow crossover vehicles that share similar features to be treated consistently,'' Treasury said, and will align vehicle classifications under the clean vehicle credit with the classification displayed on the vehicle label and on the consumer-facing website, The adjustment is retroactive to Jan. 1; motorists who bought vehicles under the new definition can get the credit, Treasury said.

(Read more electric vehicles stories.)

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