(The Center Square) – A federal tax credit for electric vehicles will soon be available to more vehicles at higher price points.
The U.S. Treasury Department updated the vehicle classification standard used to determine the price limits for the $7,500 electric vehicle tax credits available under the Inflation Reduction Act.
The department announced the change Friday. It will allow the use of a vehicle classification standard for the purpose of determining whether the vehicle is a sedan, SUV or other type of vehicle and subject to the $55,000 or $80,000 manufacturer’s suggested retail price limitation. The change allows more vehicles to qualify as SUVs.
The $55,000 cap is for sedans. The $80,000 cap is for SUVs.
The new classification standard will allow crossover vehicles that share similar features to be treated consistently, according to the department. That includes the five-seat Tesla Model Y, which was over the price cap for sedans. It will qualify as an SUV under the new policy.
The Tesla Model Y was the best-selling electric car of 2021, according to Car and Driver.
The Alliance for Automotive Innovation, which represents automakers, said it will help consumers.
John Bozzella, president and CEO of the association, called it “a very good decision that clears up some EV tax credit confusion and instantly helps customers shopping today (and tomorrow) for an electric crossover or SUV.”
The median household income in the U.S. was $64,994 from 2016 to 2020, according to the U.S. Census.
Studies show people who buy electric vehicles are more affluent than the median U.S. household.
“The average EV owner continues to be male, aged 40-55 years old, with an annual household income of more than $100,000 (2019),” according to a Fuels Institute 2021 report. A BlastPoint report found that the annual income of a family “ready to buy an EV” was $150,000 in 2021.