General Motors said it wants the US Treasury to reconsider federal tax credits qualification for its electric Cadillac Lyriq. According to the Treasury and Internal Revenue service is not classified as an SUV.
For the vehicle to be eligible its retail price should not be above $55,000 to qualify for up to $7,500 in federal tax credits. The Lyriq currently starts at $62,990. SUVs can be priced at up to $80,000 to allow, while cars, sedans, and wagons can only be priced at up to $55,000. GM told Reuters on Friday, “We are addressing these concerns with Treasury and hope that forthcoming guidance on vehicle classifications will provide the needed clarity to consumers, dealers, regulators, and manufacturers.”
GM said Treasury should use criteria and processes similar to the Environmental Protection Agency and Energy Department. “This drives consistency across existing federal policy and clarity for consumers.” GM delivered just 122 U.S. Lyriq vehicles in 2022. A Treasury spokesperson defended the classifications, saying the agency used fuel economy standards “which are pre-existing — and longstanding, EPA regulations that manufacturers are very familiar with. These standards offer clear criteria for delineating between cars and SUVs.”
EV tax credits
Legislation approved by Congress in August reformed the EV tax credit and lifted the 200,00-vehicle per manufacturer cap that had made Tesla and GM ineligible for EV tax credits effective Jan. 1. Tesla Chief Executive Elon Musk tweeted this week the EV tax rules 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 and can qualify for the credit.
The IRS said that the Volkswagen ID.4 is not classified as an SUV, while the all-wheel drive version is. Last month, Treasury said it would delay until March releasing proposed guidance on the required sourcing of EV batteries. This means some EVs that do not meet the new requirements have a brief eligibility window for the full $7,500 tax credit before battery rules take effect.
Critics of the incentives pointed out that EV sales were cruising along so why bother. U.S. EV sales rose 70% year over year through the end of the third quarter. Some critics of the benefit also don’t like the government meddling in the economy and picking some technologies, in this case, battery-powered cars, over others. Proponents of the new law pointed out that incentives would speed the transition away from gasoline-powered vehicles, which they believe is good for the environment.
