General Motors and Ford Motor have unveiled contrasting strategies in response to the change in electric vehicle (EV) incentives — following the loss of a U.S. government tax credit earlier this week, Reuters news report said.
GM disclosed its decision to introduce incentives amounting to $7,500 on its electric vehicles. This move follows the recent withdrawal of U.S. government tax credits.
Simultaneously, Ford Motor announced a price hike of up to $10,000 on select F-150 EV models.
The U.S. Treasury, in December, issued revised guidelines concerning new battery sourcing requirements, aimed at reducing reliance on Chinese EV supply chains. These guidelines took effect on Monday, impacting eligibility for tax credits.
Last month, GM had forewarned that, except for the Chevrolet Bolt, all its EVs would momentarily lose eligibility for the tax credit. Notably, the Cadillac Lyriq and Chevy Blazer EVs were excluded from the credit due to minor component issues.
Similarly, Ford had communicated earlier that its E-Transit and Mach-E would lose the $3,750 tax credit, while maintaining the credit for the F-150 EV Lightning pickup truck and the Lincoln Corsair Grand Touring SUV.
Ford’s decision to raise prices on entry-level F-150 EVs by $5,000 to $10,000 and concurrently reduce prices on certain premium models by up to $7,000 marked a strategic response to the altered tax credit landscape.
Both automakers, GM and Ford, are navigating these changes by taking measures to align with the revised guidelines. GM aims to restore eligibility for the Lyriq and Blazer EVs by early 2024 post a sourcing change. The company assured its dealers that the equivalent EV tax credit purchase amount would be provided for vehicles that became ineligible due to the revised guidelines.
The Treasury highlighted other vehicles losing eligibility, including models from Volkswagen, Nissan, Tesla, and additional Ford Mach-E variants. Consequently, the count of EV models qualifying for U.S. EV tax credits has reduced from 43 to 19.
The revamped rules now permit buyers to claim tax credits of up to $7,500 at participating dealerships during the point of sale, with specific limits on vehicle price and buyer income for eligibility.
Volkswagen, in response, is in the process of confirming eligibility for federal EV tax credits for vehicles post-January 1st.
The 2022 Inflation Reduction Act has reshaped the EV tax credit landscape, mandating North American assembly for eligibility and thus affecting nearly 70 percent of previously eligible models. Nonetheless, leased EVs still qualify for $7,500 tax credits without the battery or North American assembly requisites under the IRA rules.