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General Motors says it wants the U.S. Treasury to reconsider federal tax credit eligibility for the electric Cadillac Lyric. According to the Treasury and Internal Revenue Service, it is not classified as an SUV.
Image credits: Yahoo Finance
For the vehicle to qualify, its retail value must not exceed $55,000 and it must not qualify for a federal tax credit of up to $7,500. The Lyriq currently starts at $62,990. SUVs can be purchased for up to $80,000 to let, while cars, sedans and wagons can be purchased for as little as $55,000. “We are addressing these concerns with Treasury and hope that the upcoming guidance on vehicle classification will provide the necessary clarity for consumers, dealers, regulators and manufacturers,” GM told Reuters on Friday.
GM said Treasury should use the same standards and procedures as the Environmental Protection Agency and Energy Department. “This will bring consistency to existing federal policy and clarity for consumers.” GM has only offered 122 US Lyriq vehicles by 2022. A Treasury spokesman defended the classifications, saying the agency used fuel economy standards that were “pre-existing — and manufacturers are very familiar with — EPA regulations.” These standards provide clear criteria for distinguishing between cars and SUVs.
EV tax credits
Legislation passed by Congress in August overhauled the EV tax credit and made Tesla and GM ineligible for the EV tax credit starting Jan. 1, upping the 200,00 vehicles per manufacturer. The “confused” five-seat version of the Tesla Model Y is not considered an SUV, the seven-seat version of the Model Y may qualify for the credit.
According to the IRS, the Volkswagen ID 4 is not classified as an SUV, but rather an all-wheel drive version. Last month, the Treasury said it would delay until March the proposed guidance on the necessary supply of EV batteries. That means some EVs that don’t meet the new requirements have a shorter window of eligibility for the full $7,500 tax credit before the battery regulations take effect.
Critics of the incentives point out that EV sales are going along so why bother. U.S. EV sales were up 70 percent year-over-year through the end of the third quarter. Some critics of utilitarianism don’t like government meddling in the economy and favoring certain technologies, in this case battery-powered cars, over others. Supporters of the new law point out that incentives will accelerate the transition away from gasoline-powered vehicles, which they believe is good for the environment.
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