Lyriq

Make
Cadillac
Segment
SUV

General Motors is the latest automaker to take issue with the Inflation Reduction Act that was passed last year. The IRA restored the $7,500 federal tax credit for electric vehicles (built in North America), but the fine print is turning out to be a major issue. Despite obviously being one, the Internal Revenue Service did not qualify the 2023 Cadillac Lyriq as an SUV. According to the rules set by the IRA, this means the Lyriq can only qualify for the tax credit if it fits under a $55,000 price cap, not the $80,000 cap for SUVs, trucks, and vans.

Since the cheapest Lyriq currently starts at $62,990, it won't get any credits. GM has already responded to the IRS, hoping to correct this flaw in vehicle categorization. "We are addressing these concerns with Treasury and hope that forthcoming guidance on vehicle classifications will provide the needed clarity to consumers and dealers, as well as regulators and manufacturers," GM told Reuters.

GM recommended that the IRS follow the Environmental Protection Agency's categorizations for vehicles to create "consistency across existing federal policy and clarity for consumers." It's worth noting that GM is far from the only automaker impacted by these arbitrary rules.

The Tesla Model Y also fails to qualify for the $80,000 price cap with its five-seat configuration, but the same vehicle can get the credit with the $3,000 seven-seat option equipped. It's clear that the government didn't consult anyone in the automotive industry before crafting these rules. Tesla CEO Elon Musk tweeted that the IRS "messed up" with these categorizations.

While American automakers like GM and Tesla fight to change vehicle classifications, foreign-built EVs like the Hyundai Ioniq 5 and Kia EV6 have no chance to qualify for a tax credit since they are not built in North America. There is a small loophole that allows leases to claim the credit, but that precludes people from purchasing.

The list of EVs that will qualify for the credit is already pretty small, but it's set to shrink even further in March when the rules for battery material sourcing are announced.