EV Tax Credit shuffle - Cadillac Lyriq regains the $7,500 incentive

Max McDee, 22 February 2024

The ever-shifting rules around electric vehicle (EV) tax credits are enough to drive buyers and manufacturers crazy. First, it's on, then it's off, and then it's back on again – with fine print, loopholes, and eligibility about as reliable as that old beater in your garage. Case in point? The Cadillac Lyriq.

The Cadillac Lyriq is a sleek, all-electric SUV, with sculpted lines, a massive 33-inch LED display, and a focus on both comfort and technology. It promises a quiet and refined driving experience. Its Ultium battery platform delivers an estimated range of over 300 miles on a full charge, along with standard rear-wheel drive or optional all-wheel drive for varying needs.

EV Tax Credit shuffle - Cadillac Lyriq regains the $7,500 incentive

The luxury EV darling from General Motors briefly lost its $7,500 federal tax credit qualification this year, much to the chagrin of potential buyers. Why? Because of ever-changing regulations in the Inflation Reduction Act that dictate how and where EV battery components get sourced.

Don't worry, it's not nearly as complicated as it sounds. Cadillac managed to scramble and change sourcing for two, rather minuscule, battery components: separators and electrolytes. Think of these as the difference between premium gasoline and regular – both work, but one might get you a few more miles to the gallon.

So, here's the deal. New Cadillac Lyriq EVs now again qualify for the full $7,500 credit. That's important because the Lyriq comfortably sails under the SUV price cap for the incentive, starting at a touch over $62,000.

EV Tax Credit shuffle - Cadillac Lyriq regains the $7,500 incentive

But what about buyers who jumped on a Lyriq in January when it didn't qualify? Thankfully, Cadillac isn't leaving them high and dry; they're still dishing out a $7,500 discount to compensate for the missed tax break.

The federal EV tax credit is a bit of a shell game, but the fact remains – if you want a Caddy Lyriq, there's likely $7,500 on the table for you. GM's even pushing out a software update in March to improve the Super Cruise driver-assist system and offer some other minor tweaks.

This isn't the only GM model caught in the crosshairs. The Chevy Blazer EV also saw its tax credit vanish temporarily (and has yet to reappear). But GM is confident that models like the Chevy Equinox EV, Silverado EV, and GMC Sierra EV, and that the futuristic Cadillac OPTIQ will qualify for the full incentive.

EV Tax Credit shuffle - Cadillac Lyriq regains the $7,500 incentive

The EV tax credit system is seeing rapid uptake, with the IRS processing over 25,000 sale reports since January 1st. A significant portion (78%) includes dealer requests for advance payment of the credit, resulting in approximately $135 million disbursed to date. However, buyers should be aware of income limits – exceeding these thresholds ($300,000 for couples, $150,000 for individuals) means you'll likely have to repay the credit when filing your taxes.

The federal EV tax credit remains a confusing and volatile incentive for electric car buyers. With constantly shifting eligibility rules, price caps, and stipulations about where battery components are sourced, claiming the credit can feel like trying to hit a moving target. The best advice is to always check the latest Treasury Department guidance before assuming a new EV will qualify, and recognize that tax credit status can change unexpectedly, potentially affecting both the purchase price and overall value proposition of the vehicle.


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