Biden administration expands EV tax credit in increase for Tesla, Cadillac, others

DETROIT – The U.S. Treasury said Friday it’s altering its definition of an “SUV” to make extra electrical automobiles from Tesla, General Motors and different automakers eligible for as much as $7,500 federal tax credit at greater costs.

The choice follows Tesla CEO Elon Musk publicly criticizing the previous requirements in addition to automakers equivalent to GM and Ford Motor lobbying to alter the rules forward of ultimate guidelines being introduced subsequent month.

The change raises the retail worth cap to $80,000 from $55,000 for automobiles such because the Tesla Mannequin Y, Cadillac Lyriq, Ford Mustang Mach-E and Volkswagen’s ID.4. Beforehand some or all fashions of those automobiles didn’t qualify as a result of they did not weigh sufficient to be thought of an SUV by the Treasury’s requirements.

The credit are a part of the Biden administration’s $437 billion Inflation Discount Act, which was accredited in August. Underneath the invoice, SUVs could be priced at as much as $80,000 to qualify for EV tax credit, whereas automobiles, sedans and wagons should be priced at or beneath $55,000.

It is unclear how the choice will influence as much as 20% pricing cuts introduced by Tesla final month that made the Mannequin Y eligible for the credit. Tesla didn’t instantly reply for remark.

GM, in an emailed assertion, thanked the Treasury and hailed the adjustments: “The alignment on classification will present the wanted readability to shoppers and sellers, in addition to regulators and producers.”

The Alliance for Automotive Innovation, a lobbying group for many automakers working within the U.S., additionally recommended the choice.

–CNBC’s Chelsey Cox contributed to this text.