US Treasury Says More Electric Vehicles Will Qualify For Tax Credit

The Biden Administration has expanded the number of electric vehicles that will qualify for a tax credit.

The Details: The changes, announced by the Treasury Department on Friday, expand what the U.S. government qualifies as an SUV. This allows more vehicles to be eligible under the Democrats’ Inflation Reduction Act which enables consumers who purchase a qualifying SUV for $80,000 or less, or a passenger car for $55,000 or less to receive a $7,500 tax credit. Vehicles purchased after Jan. 1.

For Context: The move comes after prolonged pressure from auto industry manufacturers and lobbyists who believed the IRA’s initial definition of SUVs was inconsistent with how other federal agencies defined them. The IRA also stated that in order for a vehicle to be eligible for the credit, 40% of critical minerals used in batteries must be sourced in the U.S. or countries that hold free trade agreements with the U.S. However the Treasury Department says guidance on these requirements, which will likely disqualify many vehicles, will not be issued until March.

Key Quotes: Prior to the changes, Tesla CEO Elon Musk had called the EV tax rules “messed up”. John Bozzella, president of Washington-based trade group Alliance for Automotive Innovation, called the changes “a very good decision” that “helps customers”. 

How The Media Covered It: Sources across the political spectrum covered the news similarly, and emphasized that conditions will change when new battery-sourcing guidelines are implemented in March.