The US says more Tesla, Ford and GM EVs qualify for the tax credits

WASHINGTON, Feb 3 (Reuters) – The U.S. Treasury said on Friday it will make more Tesla (TSLA.O), Ford Motor (FN), General Motors (GM.N) and Volkswagen (VOWG_p.DE) electric vehicles eligible for up to 300 electric cars. to $7,500 in tax credits after it revised vehicle classification definitions.

The reversal by the Treasury Department is a win for Tesla, GM, Ford and other automakers that have lobbied the Biden administration to change vehicle tariffs.

Under the $430 billion climate bill approved in August, SUVs can be priced up to $80,000 to qualify for electric vehicle tax credits, while cars, sedans and wagons can only be priced up to $55. one thousand dollars.

The Treasury Department’s announcement allows auto manufacturers to consider crossover SUVs to qualify for the credits. The decision raises the maximum retail price to $80,000 from $55,000 for the Cadillac Lyriq from General Motors, the five-seat Model Y from Tesla, the ID.4 from Volkswagen, the Ford Mustang Mach-E, and the Escape Plug-in Hybrid. Only one copy of the VW 1D.4 was considered an SUV by the Treasury.

The Treasury Department said in December that it would use the EPA’s CAFE standards to determine whether a vehicle is a car or an SUV for purposes of the EV tax credit, but it will now use “the EPA’s fuel economy labeling standard that faces… Consumer…the change will allow crossover vehicles that share similar features to be treated more consistently.”

John Bozzella, CEO of the Automotive Innovation Alliance, praised the decision “which removes some of the confusion about the EV tax credit and immediately helps customers shop…for an electric crossover or SUV.”

GM, which has urged the US Treasury to reconsider Lyriq’s classification to allow it to qualify, said the change “will provide needed clarity to consumers and dealers, as well as regulators and manufacturers.”

Tesla CEO Elon Musk tweeted last month that EV tax rules have been “messed up.” The five-seat version of the Tesla Model Y is not considered an SUV, while the seven-seat version of the Model Y is eligible for the credit.

A person familiar with the matter said Musk raised the issue with White House officials during a meeting last week.

The Treasury said the revised definition will apply to electric vehicle purchases from January 1.

The Treasury Department said in December that it would not issue proposed guidance on battery sourcing rules until March, giving some electric vehicles that don’t meet the new requirements a few months of eligibility in 2023 before the battery rules take effect, drawing the ire of Sen. Joe Manchin. The schedule was repeated on Friday.

Our Standards: The Thomson Reuters Trust Principles.