GM Seeks U.S. Treasury Reconsideration For Cadillac Lyriq EV Tax Credits

On January 6th, General Motors announced its intention to request the U.S. Treasury to reevaluate the classification of its electric Cadillac Lyriq to enable eligibility for federal tax incentives. The issue arises from the Treasury and IRS not categorizing the Lyriq as an SUV, which subjects it to a retail price cap of $55,000 to be eligible for up to $7,500 in federal tax credits.

However, the starting price of the Lyriq is $62,990. In contrast, SUVs are allowed a higher price cap of up to $80,000 to qualify, whereas cars, sedans, and wagons have a $55,000 limit.

GM expressed its concerns to Reuters, stating, “We are in discussions with the Treasury and anticipate that upcoming guidelines on vehicle classifications will clarify the situation for consumers, dealers, regulators, and manufacturers alike.” The company suggests the Treasury adopt criteria and procedures similar to those of the Environmental Protection Agency and the Department of Energy to ensure consistency with federal policy and clarity for consumers.

In 2022, GM reported U.S. deliveries of just 122 Lyriq vehicles. A Treasury spokesperson defended the vehicle classifications, explaining they are based on fuel economy standards that follow established EPA regulations, which clearly differentiate between cars and SUVs.

Legislation passed by Congress in August revised the EV tax credit system, removing the 200,000-vehicle per manufacturer cap, which previously excluded Tesla and GM from receiving EV tax credits from January 1.

Elon Musk, CEO of Tesla, criticized the EV tax rules as “messed up.” The Tesla Model Y with five seats is not categorized as an SUV and thus ineligible for the credit, whereas its seven-seat version qualifies.

The IRS stated that the Volkswagen ID.4 is not classified as an SUV unless it’s the all-wheel-drive variant. Volkswagen did not comment on the matter.

The Treasury also announced a delay until March in publishing proposed guidelines concerning EV battery sourcing requirements. Consequently, some EVs that don’t meet the upcoming requirements may temporarily qualify for the full $7,500 tax credit until the new battery regulations are implemented.

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