Treasury alters EV tax rules to make it simpler to qualify as an SUV, helping Ford and Tesla.

Ford Mustang Mach-E: Is it an SUV? How about the Model Y from Tesla? The response could be “Yes,” “No,” or “It depends,” depending on whatever branch of the US government you question.

That response might mean thousands of dollars for certain car buyers and a lot of money for carmaker profits with the new regulations for electric vehicle tax credits now in place. The new rules prohibit automobile buyers from claiming tax credits for vehicles that cost more than $55,000. However, the retail price for SUVs can reach as much as $80,000. For the purpose of tax incentives, the Treasury Department formerly classified the Mustang Mach-E as a car rather than an SUV. The Tesla Model Y is the same, unless it has a third row of seats.

However, regardless of how many seats they have, both of those models will show up in your search for electric SUVs on the EPA’s website. The tax regulations appeared to contravene both logic and what the EPA was advising. In order to meet with the “consumer-facing” criterion the EPA uses on fuel-economy labels and on its website, the US Treasury Department stated on Friday that it was revising the definition of an SUV.

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The Treasury Department previously relied on National Highway Traffic Administration vehicle definitions to implement Corporate Average Fuel Economy standards. When compared to what the typical American might believe based on a vehicle’s shape, the so-called CAFE definitions of automobiles frequently disagree. Additionally, a car may be classified as an SUV under the CAFE standards if it has specific features, but an SUV if it doesn’t.

If the Volkswagen ID.4 had all-wheel drive, it would be classified under CAFE as an SUV; otherwise, it would be a car. No matter how they are equipped, those vehicles are SUVs according to the criteria the EPA employed for its website.

The Treasury Department stated in a statement that “this move would allow crossover vehicles that share similar features to be treated consistently.”

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However, not every vehicle that an automaker offers as an SUV will automatically meet the requirements. Even though GM refers to the Chevrolet Bolt EUV as a crossover SUV version of the Bolt hatchback, it still has a $55,000 price restriction. According to Chris Harto, a senior policy researcher for Consumer Reports, the distinctions between automobiles and SUVs are frequently fairly hazy.

The majority of the time, he continued, “They’re actually simply hatchbacks and station wagons with, you know, slightly better marketing.”

According to Treasury’s announcement, anybody who bought a car after January 1, 2023 but weren’t eligible for a tax credit before may now be eligible. According to Treasury, no automobiles will no longer be eligible as a result of this rule change.

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