In a favorable government move revealed on Friday, several EVs qualify for a tax credit of $7,500. In the latest breaking news today, the rules were amended by the Treasury Department to classify the vehicles as subject to certain price caps. The vehicle subsidy rules are modified under the inflation reduction act, favoring the auto industry in the US.
According to a communiqué from the department, SUVs and more electric crossovers, which were not eligible for tax credits previously, are now eligible for the $7,500 vehicle subsidy program. It is a joy for auto manufacturers and car buyers to own a vehicle with a reduced payment.
A delight for companies like Tesla
The US auto industry cheers the favorable federal government move to cover previously exempted models like the Cadillac Lyriq and the Model Y of Tesla under the adjusted eligibility requirements to qualify for a tax rebate. Recently, auto companies like Ford and Tesla have reduced the price of some EV models, which are expensive and ineligible to qualify for a tax rebate under the previous criteria.
Own your new EV today with a tax credit
According to John Bozzella, CEO and President of the Alliance for Automotive Innovation, the Federal Government’s decision eliminates confusion about tax credits and allows customers to make an instant decision to buy their favorite electric vehicle today or tomorrow.
The auto manufacturers, like General Motors and Tesla, can now sell more vehicles with the cap removed under the Inflation Reduction Act, and car buyers are eligible for tax credits. However, restrictions are also imposed under the new act, considering factors like the taxpayer’s income, the price of the vehicle, and the location where the vehicle is manufactured.
To qualify for the tax credit, you need to buy a vehicle manufactured in North America, and there is a price cap on EV models. For instance, the price limit set to be eligible for tax credits is $80,000 for pickups, trucks, and SUVs and $55,000 for other vehicles.
The US Treasury Department would use the corporate average fuel economy standards (CAFC) under the EVA (Environmental Protection Agency) to define the eligibility of a vehicle for a tax credit. The Ford Mach E and Tesla Model Y are classified as sedans under this act. However, industry lobby groups and automakers resisted the Treasury Department’s idea, claiming that it is inconsistent with the standards set by other federal agencies in classifying cars and SUVs.
In the latest BNN News, considering the views of the industry lobby groups, the Treasury Department says it will classify the vehicle based on the label and information mentioned about models on the fuel economy site. The new rule allows the classification of crossovers with similar features.
Tesla slashes the price of the Model Y crossover
To qualify for tax credits, Tesla reduced the prices of the Model 3 sedan and Model Y crossover to $53,990 and $52,990, respectively, in January. In a similar move, Ford also reduced the price of its Mach E, a few weeks later.
Tesla CEO Elon Musk has been urging customers to contact the government about eligibility rules for a tax credit. Customers who purchased the vehicles on January 1 or later can claim a tax credit.