GM plans sourcing shift for EV models no longer eligible for tax credit

Dive Brief:

General Motors is making sourcing changes for several vehicle models to make them eligible for federal tax credits, GM said last month in a letter to dealers, which was shared with Automotive Dive.
The news comes after the Treasury Department announced electric vehicles with certain foreign battery content would in 2024 become ineligible for the federal clean energy vehicle tax credits.
GM said it is “well positioned” to adjust quickly to the new rules, and anticipates the Cadillac Lyriq and Optiq; Chevrolet Blazer EV, Equinox EV and Silverado EV; and GMC Sierra EV will become eligible in early 2024 after the automaker makes the required supply chain changes.

Dive Insight:

GM will provide up to $7,500 in additional financial incentives for EVs that became ineligible for federal tax credits to help car dealers sell EVs until more of its models are eligible for the tax credits.

The Chevrolet Bolt EV and Bolt EUV remain eligible for the tax credits, but the Cadillac Lyriq, Chevrolet Blazer EV and other GM models were among 21 EVs to become ineligible for tax credits in 2024 after regulators clarified the rules for using EV components and critical minerals sourced from China.

“Under Treasury’s new rules, certain EVs such as LYRIQ and Blazer EV will no longer be eligible to receive the purchase incentive beginning January 1, 2024 because they include two minor non-qualifying components,” the automaker wrote. “However, all Bolt EV and EUV models will continue to be eligible for the full $7,500 consumer purchase credit.”

In the letter, GM said it would provide further information as soon as possible, and recommended that dealers “preserve eligible inventory for eligible customers” by selling ineligible vehicles to customers who do not qualify for EV tax credits because their incomes are too high.

The automaker also recommended that dealers offer ineligible vehicles to leasing and commercial customers since the tax credit changes do not affect leasing or commercial purchase incentives.

Edwin Lopez contributed to this story.