Tesla Model Y full electric crossover SUV on dsipaly at Brussels Expo on January 13, 2023 in Brussels, Belgium. (Photo by Sjoerd van der Wal/Getty Images)
The U.S. Treasury Department has changed the standard for what kind of electric vehicles qualify for a federal tax benefit under the Inflation Reduction Act.
Before this change, electric vehicles such as the Tesla Model Y, Ford Mustang Mach-E, Cadillac Lyriq, and Volkswagen’s ID.4 were not considered SUVs because of their lower weight. This meant they couldn't access the credit that capped Manufacturer Suggested Retail Price (MSRP) at $80,000, and they were too expensive to get access to the credit with the $55,000 cap.
Tesla CEO Elon Musk tweeted a month ago that the prior rule was "messed up!"
Now these newly minted SUVs qualify for the $7,500 credit if they cost $80,000 or less, while cars, sedans, and wagons continue to qualify if they are priced less than $55,000.
"This change will allow crossover vehicles that share similar features to be treated consistently," said the Treasury Department in a press release. "It will also align vehicle classifications under the clean vehicle credit with the classification displayed on the vehicle label and on the consumer-facing website FuelEconomy.gov."
After years of price increases for cars and trucks in the United States, costs are slowing and in some cases falling, helping cool overall inflation and giving frustrated Americans more hope of finding an affordable vehicle.
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