More EVs Qualify for Tax Credits Under New Rules

Electric vehicle at charging station

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Key Takeaways

  • The Treasury Department announced new guidelines making more electric vehicles (EVs) eligible for federal tax credits.
  • The new rules adjust the price limits that apply to certain types of vehicles.
  • Carmakers had spoken out in favor of the change.

Tesla (TSLA) and other electric vehicle (EV) makers got a boost after the Treasury Department expanded the kind of EVs that are eligible for federal tax credits.

The department indicated it will change the way it determines which EVs meet the price limits to qualify. Under the Inflation Reduction Act signed into law last year, cars, sedans, and wagons couldn't cost more than $55,000, while SUVs, vans, and pickup trucks could be as high as $80,000.

Under the new guidelines, vehicles such as the Tesla Model Y, General Motors' (GM) Cadillac Lyriq, and the Ford (F) Mustang Mach-E would now be measured by the higher price standard. The department explained the decision was designed "to make it easier for consumers to know which vehicles qualify" under the cap.

Industry Wanted Revision

Carmakers had pushed for the change. Tesla CEO Elon Musk called the standards "Messed up!" in a tweet in January. It's reported that he brought up the issue when he recently met with White House officials.

The department added that the ruling affects buyers who purchased and placed in service vehicles since Jan 1. 

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  1. U.S. Department of the Treasury. "Treasury Updates Vehicle Classification Standard for Clean Vehicle Tax Credits Under Inflation Reduction Act."

  2. Twitter. "Elon Musk."

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