General Motors (GM) recently announced that it will offer incentives of up to $7,500 for some new electric vehicle (EV) purchases. The new incentives come after several GM EVs lost qualification for the federal electric vehicle tax credit, which provides up to $7,500 off on the purchase of qualifying EVs.
New rules for the tax credit — revised as part of 2022’s Inflation Reduction Act (IRA) — enforce strict component sourcing requirements in an attempt to move car makers away from components sourced or manufactured in China and other “foreign entities of concern.” Though it was enacted last year, manufacturers were given time to move in line with requirements, and the final rules went into effect earlier this month — at the turn of the new year. As of right now, only a handful of EVs qualify for the full tax credit of $7,500 — many don’t qualify at all or only qualify for the half-tax credit.
As a result of these strict requirements, GM announced that all of its EVs, with the exception of the Chevrolet Bolt, would temporarily lose the credit due to component sourcing, but anticipated that the entire line of EVs would qualify by year’s end. In lieu of the credit, the manufacturer is now offering $7,500 incentives on purchases of EVs that don’t qualify for the credit.
GM made the announcement in a letter to dealers late last year, saying, “GM is well positioned to quickly adjust to these new rules, and we anticipate qualification of GM EVs for most of 2024. However, on January 1, 2024, only Bolt EVs and EUVs will be eligible for the consumer purchase incentive. We anticipate more EVs, including the Cadillac LYRIQ, Chevrolet Blazer EV, Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV, and Cadillac OPTIQ produced after the sourcing change, will be eligible for the full incentive.”
The manufacturer also released a searchable database that allows customers to search by VIN number to determine if a vehicle they want is eligible for the federal EV tax credit.
President Biden’s Inflation Reduction Act provides significant incentives to both EV consumers and manufacturers. For vehicles to qualify for the full credits, components must be sourced in North America. Vehicles can qualify for half the credit, $3,750, if components are sourced from a country with a U.S. free trade agreement to decrease U.S. dependence on Chinese-sourced materials.
General Motors advised dealers to retain tax credit-eligible EVs for eligible buyers — there is an income limit for the tax credit — and sell vehicles that are ineligible to buyers whose incomes disqualify them for the credit or to commercial or fleet buyers who aren’t affected by the new rules.
In the meantime, GM said it would provide dealers with an incentive that matches the tax credit amount on newly ineligible vehicles until they become eligible — a matter of months, they say, as they sort out supply chain logistics.
Here’s the full list of EVs that currently qualify for the full EV tax credit.