The U.S. Treasury Department has revised its vehicle classification definitions, making even more electric cars eligible for the 7,500 dollar tax credit there. Moreover, the revision is applied retroactively, meaning all vehicles purchased since the beginning of the year can qualify.
Now, all variants of the Tesla Model Y, Cadillac Lyric, Ford Mustang Mach-E and VW ID.4 are eligible for the incentives. Before, only models with a price tag of less than 55,000 dollars were considered for the tax credit.
The reason: some of the above mentioned models were not classified as SUVs, as the IRS had previously used the vehicle’s Gross Vehicle Weight Rating (GVWR) to determine whether it is an SUV or not. A definition, the Treasury Department has now changed, raising the retail price cap to 80,000 dollars.
Battery mineral and component requirements that electric cars must meet to qualify for tax incentives under the Inflation Reduction Act will not be published until March 2023. All that is certain, is that an eligible vehicle must be assembled in North America. There are 3,750 dollars in tax credits if at least 40 per cent of the battery-critical minerals come from the United States or countries with a free trade agreement with the United States. The other 3,750 dollars is available if at least 50 per cent of the vehicle’s battery components come from the United States or countries with a free trade agreement with the United States. Over the years, both percentages continue to increase.
There is a backdoor for foreign in manufacturers, however. That is, if the vehicles are are leased and used commercially.
treasury.gov, irs.gov via insideevs.com, electrek.co
Keyword: New vehicle classification in the US: More EVs qualify for tax break