GM offers $7,500 incentive for EVs losing tax credit

By David Shepardson

WASHINGTON (Reuters) - General Motors said Wednesday it is offering $7,500 incentives on its electric vehicles that lost a U.S. government tax credit this week.

The Treasury issued guidelines in December that took effect Monday detailing new battery sourcing requirements aimed at weaning the U.S. EV supply chain away from China.

GM said last month all of its EVs would temporarily lose eligibility except the Chevrolet Bolt, adding the Cadillac Lyriq and Chevy Blazer EV are losing the credit because of two minor components.

GM told its dealers it would provide the equivalent EV tax credit purchase amount "for any vehicles that became ineligible due to the new guidelines."

GM expects after a sourcing change the Lyriq and Blazer EV will regain eligibility in early 2024 and said its Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV and Cadillac OPTIQ produced "after the sourcing change will be eligible for the full incentive."

Other vehicles losing the credit include the Volkswagen ID.4, Nissan Leaf, some Tesla Model 3s and Ford Mach-E, the U.S. Treasury said.

The number of EV models qualifying for U.S. EV tax credits fell from 43 to 19.

The new rules allow buyers to claim tax credits of up to $7,500 at participating dealerships at the point of sale. The tax credit sets limits on vehicle price and buyer income to qualify.

Volkswagen said on Monday it "is in the process of confirming eligibility for a federal EV tax credit for vehicles" after Jan. 1.

The 2022 Inflation Reduction Act law reformed the EV tax credit, requiring vehicles to be assembled in North America to qualify for any tax credits, eliminating nearly 70% of eligible models at the time.

The IRA rules allow leased EVs to qualify for $7,500 tax credits without the battery or North America assembly requirements.

(Reporting by David Shepardson, Editing by Nick Zieminski)