The Biden administration will allow more cross-over SUVs to qualify for the newly-revamped electric vehicle tax credit following lobbying by automakers such as General Motors Co. and Stellantis NV.
The change announced Friday by the Treasury Department effectively expands the number of buyers who can take advantage of a lucrative $7,500 consumer tax credit by broadening the definition of how a sport-utility vehicle is defined. The tweak matters because under Democrats’ Inflation Reduction Act, SUVs costing up to $80,000 can receive the tax credits, while passenger-car buyers get nothing if the vehicle costs more than $55,000.
Specifically, the agency said it would begin using the EPA fuel economy labeling when deciding which vehicles qualify for an SUV. The adjustment is retroactive to Jan 1., meaning consumers who already bought vehicles under the new definition can get the credit, the agency said.
“This change will allow crossover vehicles that share similar features to be treated consistently,” the Treasury Department said in a statement. “It will also align vehicle classifications under the clean vehicle credit with the classification displayed on the vehicle label and on the consumer-facing website FuelEconomy.gov.”
The move to eschew a more narrow SUV definition is a victory for automakers like General Motors and Stellantis, which pushed for the change. It means models like GM’s new $63,000 Cadillac Lyriq and high-end verisons of Ford Motor Co.’s electric Mustang Mach-E. and Tesla Inc.’s Model Y, which the Treasury previously considered cars, can qualify for credits.
This article was provided by Bloomberg News.