GM said its full lineup of electric vehicles will qualify for the $7,500 tax tax credit.
Geoff Robins /AFP via Getty Images
The Internal Revenue Service will update which electric vehicles qualify for what credits this week. Companies have started to steal the agency’s thunder. The news is better for some EV makers than others.
General Motors (GM) announced Monday that its full lineup of electric vehicles will qualify for the $7,500 tax tax credit. It’s a good outcome for the company and shares were rising Monday.
And the outcome for GM is better than those for Ford Motor
‘s (F) Mustang Mach E or the Tesla (TSLA) Model 3.
Tesla
‘s website now says the rear-wheel drive Model 3 will only qualify for a $3,750 federal purchase tax credit starting on April 18. The website still says that all Model Ys qualify for the full credit.
Ford said its Mustang Mach E lost half of the credit on April 5.
The IRS is redoing credit qualifications to account for where batteries are purchased and where battery materials are sourced. The Mach E lost half its credit because of battery sourcing. Tesla didn’t immediately respond to a request for comment from Barron’s about why it lost half the credit. Battery sourcing is most likely the reason.
At least some of the batteries for Tesla’s standard range vehicles come from China’s Contemporary Amperex Technology Co Ltd (300750.China), which is better known as CATL.
Investors have known that changes were coming. Still, Tesla stock was down a little in Monday trading, while GM rose 1.3%. The S&P 500 and Dow Jones Industrial Average were hovering around flat for the session.
The credits have been a source of some volatility for EV stocks. To start, the IRS didn’t classify the Model Y or Mach E as sport-utility vehicles. They reversed that decision later. Then came the update at the end of the first quarter that credits for vehicles would be adjusted by April 18
The credits, passed as part of the Inflation Reduction Act, have been harder to implement than most investors expected.
Write to Al Root at [email protected]
