GM trounces Tesla to offer $7,500 discount on US EVs losing tax incentive

The Chevrolet Blazer EV temporarily doesn’t qualify for US federal tax incentives, but GM says it will offer buyers a discount to compensate. (Image source: Chevrolet)

General Motors confirmed that it will match the US IRA tax incentives for its Chevrolet Blazer EV and Cadillac Lyriq electric vehicles that will no longer be eligible for the tax reduction after the January 1 rule changes. The regular Tesla Model 3 also lost eligibility, and Tesla has not yet commented on whether it will compensate, as it did in Germany in December.

Recent changes to the rules for the Inflation Reduction Act exclude electric vehicles made with battery components from companies that have ties to governments in adversarial relationships with the US. This wiped out a huge swathe of EVs from IRA tax incentive eligibility lists, including the Tesla Cybertruck, Model 3, Model Y, Nissan Leaf, Cadillac, Lyriq, and Chevrolet Blazer EV, among others.

While carmakers are scrambling to switch supply chains and regain the vital federal tax incentives, in the meantime, Chevrolet confirmed to The Detroit Free Press that it would offer prospective customers a $7,500 discount on EVs that lost the tax incentive.

This follows a similar move from Tesla after its German customers lost similar subsidies for the Model 3 and Y. While the Model 3 has, with the exception of the Performance trim, also lost access to the US federal tax incentives, Tesla has not yet commented on how it will approach the situation on American shores.

After losing eligibility for the discount, the Model 3 comes in significantly more expensive than the Chevrolet Bolt EV or EUV, which have long held the EV value crown.

According to a Liz Winter, a GM spokesperson, there are only two components that exclude the Blazer EV and Cadillac Lyriq EV from eligibility, and the company is working fast to switch sources for those parts.

The Cadillac Lyriq and Chevrolet Blazer EV will temporarily lose eligibility for the clean vehicle credit on Jan. 1, 2024 because of two minor components. While we await final rules, GM has pulled ahead sourcing plans for qualifying components in early 2024 and will advocate for our dealers and customers who purchase vehicles built ahead of the new guidance. – Liz Winter, GM spokesperson

Meanwhile, other brands, like Hyundai and Kia, continue to push the leasing loophole for customers looking to take advantage of the $7,500 tax incentive on vehicles that lost EV tax incentives when battery origin restrictions first came into play.

The continued reliance on federal tax incentives to increase EV adoption puts EV makers that have built their pricing structures around the tax incentives in a tough position if they want to be price competitive. These manufacturers are at the whim of regulators, and the erosion and eventual loss of the IRA EV tax incentive could hurt not only EV profit margins but the switch to electric vehicles, to boot.

Read about the development of Tesla’s EVs in Walter Isaacson’s biography of Elon Musk, or ditch your car entirely with a Hover-1 Pro Series Altai R500/R750 e-bike from Amazon.

Julian van der Merwe – Magazine & Specialist News Writer – 527 articles published on Notebookcheck since 2022

My interest in tech started in high school, rooting and flashing my Motorola Defy, but I really fell down the rabbit hole when I realised I could overclock the i7 930 in my Gigabyte pre-built PC. This tinkering addiction eventually lead me to study product design in university. I think tech should improve the lives of the people using it, no matter the field. I like to read and write about laptops, smartphones, software and trends in technology.

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