New rules disqualify some EV incentives; GM working on supply fix to gain eligibility
Several electrified vehicles models no longer will qualify for federal tax credit incentivizes after the new year following clarified rules regarding the subsidies.
General Motors Co. has told its dealers it's working to quickly adjust the supply for parts on the Chevrolet Blazer EV and Cadillac Lyriq EV that make it ineligible to receive a $7,500 consumer incentive after the first of the year.
At Ford Motor Co., the Mustang Mach-E SUV and Ford E-Transit commercial van no longer will qualify for a $3,750 tax credit. The Lincoln Aviator Grand Touring plug-in hybrid also will no longer be eligible for the $7,500 incentive.
In early December, the U.S. Treasury Department and Internal Revenue Service released guidance to clarify eligibility of the consumer tax credit on vehicles sold after Jan. 1. The rules disqualify EVs with specific foreign battery content. The tax credit, which starting in January will be able to be applied at the point of sale, was amended as a part of the Inflation Reduction Act to encourage domestic manufacturing and local supply-chain development.
It offers up to $7,500 on vehicle purchases as well as leases, but for purchases, the vehicles have to meet certain manufacturing requirements to be eligible for the full amount. The legislation necessitates that vehicle assembly happens in North America. There also are limits on from where batteries and their materials can come.
"After reviewing Treasury's long-awaited proposed guidance, we believe the Cadillac LYRIQ and Chevrolet Blazer EV will temporarily lose eligibility for the clean vehicle credit on Jan. 1, 2024 because of two minor components," GM spokesperson Liz Winter said in a statement. "While we await final rules, GM has pulled ahead sourcing plans for qualifying components in early 2024 and will advocate for our dealers and customers who purchase vehicles built ahead of the new guidance."
The components at issue for GM are separators and electrolytes. Chevrolet Bolt EVs and EUVs will remain eligible for the credit. The GMC Hummer EV truck and SUV were not eligible because of their higher price. Nothing commercial, including the Chevrolet Silverado EV Work Truck, will lose the incentive.
"GM is quickly transitioning so all remaining GM EVs under the MSRP cap will be eligible for the full incentive in early 2024, including the Cadillac LYRIQ and OPTIQ, Chevrolet Blazer EV, Equinox EV, Silverado EV and GMC Sierra EV," Winter said.
Next year, dealers will be able to offer the $7,500 at point of sale.
In a letter to dealers, John Roth, vice president of Cadillac, and Scott Bell, vice president of Chevrolet said: "We are committed to the future of EVs and will have the sales and marketing support to sell these ineligible vehicles. Beginning in January, GM will provide the equivalent EV tax credit purchase amount for any vehicles that became ineligible due to the new guidelines."
At Ford, three vehicles still will be eligible for the tax credits in 2024 when their manufacturer's suggested retail price are at or below $80,000 and the purchaser meets the law's income limits. The Ford F-150 Lightning qualifies for the full $7,500, while the Escape and Lincoln Corsair Grand Touring plug-in hybrids are eligible for the $3,750 amount.
Stellantis NV expects no changes for its available plug-in hybrids. The Chrysler Pacifica Hybrid minivan qualifies for the full $7,500 credit. The Jeep Wrangler and Grand Cherokee 4xe SUVs qualify for up to $3,750 on a purchase.
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