PRICEY SUVS EMERGE AS HOT POINT IN DEBATE OVER EV TAX CREDITS

General Motors has taken a central role in pushing the Treasury Department to change how the government defines a sport utility vehicle and expand how many buyers can get electric-vehicle tax credits under President Biden’s Inflation Reduction Act.

Billions of dollar in EV incentives over the next decade are at stake as the government and companies hash out final rules, expected in March. At the center of the debate is this question: What’s a car and what’s an SUV? That’s because SUVS costing up to $80,000 can get $7,500 in tax credits, while passenger-car buyers get nothing if the vehicle costs more than $55,000.

Adding to the complexity is that the IRS, which is currently writing regulations for the tax credits, has a more narrow SUV definition than the Environmental Protection Agency. GM and other automakers are lobbying for the EPA’S more broad definition to dictate who can get tax breaks for buying EVS.

“It’s going to be really important for us and our competitors to get clarity on the car versus truck SUV definition,” said Chris Feuell, head of Stellantis’ Chrysler brand. “There are a lot of very aggressive, low-emission vehicle targets that are in place across the country.”

The definitions are subjective because of a boom over the past couple of decades in crossover vehicles, which have blurred the line between traditional sedans and SUVS.

If the EPA designations are used, GM’S new $63,000 Cadillac Lyriq would be considered an SUV and get up to $7,500 in tax credits. But the current IRS interpretation lists the Lyriq as a car, so buyers would get nothing even though the vehicle and its battery are built in the U.S. GM calls the Lyriq an SUV because it rides higher off the ground than Cadillac sedans and meets the size and weight specs under EPA rules. The IRS sees it differently and listed the vehicle as a car because it doesn’t have a third row of seats.

Ford has a similar quandary with its electric Mustang Mach-e. The vehicle is designated as a passenger car, so the base model — starting at $47,000 — would qualify, but other versions can cost more than $70,000 and would not.

Tesla’s Model Y, which the company markets as a midsize SUV, gets a passenger car designation with two rows of seats but gets to be an SUV for version that have three rows.

Other makers like Volkswagen have models — such as its ID.4 electric wagon — that are caught in the regulations’ crosshairs because they consider whether a car has all-wheel drive to determine SUV status.