Tesla Model Y and Mustang Mach-E were left out of the new $7,500 federal tax credit for electric vehicles for a dumb reason, but you can do something about it.
As we reported last week, the US Treasury released the full list of electric vehicles eligible for the new $7,500 tax credit coming into affect this year.
At the time, we noted that there were some inconsistencies on the eligibility for the SUVs. The type of vehicle is significant since it determines a price limit to be eligible for the tax credit.
SUVs and pickup trucks have a higher MSRP limit of $80,000 instead of $55,000 for all other vehicles.
We noted that the Tesla Model Y only qualified with a seven-seat configuration and other SUVs, like the Ford Mustang Mach-E, also weren’t considered SUVs, according to the IRS list.
That’s despite the VW ID.4, which has about the same size as the Model Y and Mach-E, being considered a SUV and getting access to the tax credit for a price of up to $80,000.
It appears that the IRS defines a SUV only by the vehicle’s GVWR or Gross Vehicle Weight Rating, which appears to need to be over 6,000 lbs to be considered a SUV. There might also be some other criteria that the IRS hasn’t shared because, again, there are some inconsistencies in the list if it’s just based on weight.
Many EV enthusiasts are seeing this as a major mistake since it goes against the purpose of the program, which is to encourage sales of more efficient vehicles. Vehicles with lighter weights are more efficient. There are several SUVs that have less cargo space than the Tesla Model Y and Ford Mustang Mach-E that are considered SUVs in the program, like the BMW X5 plug-in and Jeep Wrangler plug-in.
Now I understand that it can be hard to define an SUV, and the term (along with “crossover”) has been used loosely over the years.
Top comment by CMG30
You're absolutely right. The definitions are silly. But the solution is not to include more expensive EVs into the program, the solution is to reduce the qualifying price down to ~$50 000 across the board.
At the point of development that EVs have now reached, there is zero reason to be subsidizing the purchase of a vehicle that costs more than the annual salary of most Americans.
What we need to now encourage is the production of affordable EVs. Continuing to offer these large incentives for these really expensive models is just encourage manufacturers to build for the minority of well off folks.
However, it’s inexcusable that the new tax credit gives $7,500 for a vehicle like the Jeep Cherokee 4xe and not the Tesla Model Y.
The main thing that people define a SUV by is the utility aspect. Of course, there’s the shape and height, but the cargo space inside is a big deal, and the Model Y actually has 100 liters more cargo space than the Cherokee 4xe.
Model Y also has an efficiency of 115 MPGe versus 56 MPGe for the Cherokee 4xe.
It makes no sense that the former doesn’t get access to the credit but the latter does.
FTC: We use income earning auto affiliate links. More.