General Motors (NYSE:GM) announced Wednesday that the company will be offering incentives of $7,500 on its electric vehicles, despite the recent loss of a U.S. government tax credit.
The Treasury released guidelines in December outlining fresh requirements for battery sourcing, with the goal of reducing reliance on China within the U.S. EV supply chain. These guidelines became effective this Monday.
GM informed its dealers that it would provide the equivalent EV tax credit amount "for any vehicles that became ineligible due to the new guidelines."
Last month, GM announced that all its EVs, except for the Chevrolet Bolt, would temporarily become ineligible for the tax credit. They clarified that the Cadillac Lyriq and Chevy Blazer EVs were losing eligibility due to issues related to two minor components.
GM anticipates that following a sourcing modification, both the Lyriq and Blazer EVs will requalify for eligibility in early 2024. Furthermore, they specified that the Chevrolet Equinox EV, Chevrolet Silverado EV, GMC Sierra EV, and Cadillac OPTIQ manufactured "after the sourcing change" will be eligible to receive the full incentive.
Similarly, Ford (NYSE:F) revealed last month that its E-Transit and Mach-E would no longer qualify for the $3,750 tax credit. However, the F-150 EV Lightning pickup truck and the Lincoln Corsair Grand Touring SUV retained their tax credits.
On Wednesday, Ford stated its plans to raise the prices of its entry-level F-150 EVs by $5,000 to $10,000 while reducing prices for select premium models by up to $7,000.
The 2022 Inflation Reduction Act brought significant reforms to the EV tax credit. Under this law, vehicles are now mandated to be assembled in North America to qualify for any tax credits, effectively disqualifying nearly 70% of the models that were previously eligible.
However, the IRA rules provide an exception for leased EVs, allowing them to qualify for $7,500 tax credits without needing to meet the battery or North America assembly requirements.
Shares of GM are down 1.96% in afternoon trading on Wednesday.