Today, the US Treasury Department announced new ways to classify vehicles. This means more cars can be SUVs and get the most recent EV tax credits. Under the new rules, SUVs like the Cadillac Lyriq, Ford Mustang Mach-E, Tesla Model Y, and others can now have an MSRP cap of $80,000. Since the rule change goes back in time, anyone who bought a car after January 1, 2023, that now qualifies for the credit can apply for it. The rules for federal tax credits for electric vehicles, which are already complicated, are about to change again. The MSRP price limit for SUVs has been raised from $55,000 to $80,000 in the most recent update, including pickup trucks and vans. This lets more models be put into the same category. How do they see it makes all the difference? The US Treasury Department updated its regulations for vehicle classification as part of the Inflation Reduction Act (IRA). The Energy and Environmental Protection Administration employs very similar criteria when determining a vehicle’s size and type. The IRA gave this decision to Janet Yellen, the Secretary of the Treasury. Before the United States Treasury Department switched to a method based on the fuel efficiency labeling standard, the Corporate Average Fuel Economy (CAFE) standards were in use to categorize vehicles. The Department of the Treasury has stated that it is still possible to receive the credit even if you purchase an electric car in 2023 that did not qualify in the past but does now. The previous regulations will continue to apply until the new ones have been ratified, the exact timing of which we are still working out. Both Ford and Tesla have just recently announced that they will be lowering the prices of their automobiles, which means that even more expensive vehicles can now be purchased at more affordable rates. In late December, the Internal Revenue Service provided definitions for a few terms used throughout the IRA. This clarified which electric vehicles (EVs) would be eligible for the rebate once the new year began. In August, the IRA became law. As part of today’s announcement, the Treasury Department reminded everyone that it would clarify its critical minerals and batteries rules in March. This affects both automakers and people who want to buy cars Ford, GM, and Tesla all think the old rules need to be changed. The Treasury’s “alignment” with the CAFE standards “will give consumers, dealers, regulators, and manufacturers the clarity they need,” GM told Car and Driver in a statement. The company says tax breaks have been “electric vehicle usage has been shown to increase as a result of this.” Chris Smith, who is in charge of government affairs at Ford, told C/D: “We know that it will be hard for the Treasury Department to carry out the Inflation Reduction Act. We’re thankful for their care and hard work in ensuring more clients can take advantage of the Act’s tax credits for clean vehicles.” Now that they are SUVs instead of cars, a few vehicles that used to have a lower price cap are now available to EV buyers, or at least their more expensive trim levels are. The Cadillac Lyriq, Ford Mustang Mach-E, Tesla Model Y, and Volkswagen ID.4 are among the models that are affected. The Treasury Department says, “This change will make it possible for crossover vehicles with similar features to be treated the same way.”
