More Tesla, Ford and General Motors electric vehicles will be eligible for tax credits of up to $7,500 after the U.S. Treasury Department revised the vehicle classification definitions on Friday. Tesla stock slid by Friday's closing bell after surging early in the day. TSLA is on a major rally since the beginning of January. Meanwhile, GM stock edged down slightly, and Ford stock fell following its major earnings miss Thursday.
According to the $430 billion Inflation Reduction Act signed into law in August, electric cars, sedans and wagons priced up to $55,000 can qualify for $7,500 tax credits. In addition, sports utility vehicles (SUVs) priced up to $80,000 also qualified for the $7,500 tax credit.
Now, the Treasury will use Environmental Protection Agency fuel economy labeling standards. This expands the definition of SUVs to include more crossovers. That will allow vehicles, such as Tesla's model Y, to qualify for earnings even when loaded with more options.
"This change will allow crossover vehicles that share similar features to be treated consistently," Treasury wrote in its release. "It will also align vehicle classifications under the clean vehicle credit with the classification displayed on the vehicle label and on the consumer — facing website FuelEconomy.gov."
Customers who purchased qualified electric vehicles since Jan. 1 can claim the tax credit, even if the vehicles did not qualify under the prior standard, the Treasury Dept. says.
Now, GM's Cadillac Lyriq, Ford's Mustang Mach-E and Tesla's Model Y, which were previously deemed cars and priced over the $55,000 limit, qualify for the EV tax credit.
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Ford, GM Make The EV Switch
The news comes as EV makers Lucid and Tesla's stock staged huge rebounds in January. And as legacy automakers are in early stages of becoming electric-vehicle brands have started cutting price in order to better compete with industry leader Tesla.
Ford reported a major Q4 earnings miss Thursday due to "execution issues," supply chain and production challenges. As a result, the company's costs rose while delivery volumes fell. Still, Ford said it grew new vehicle sales in the U.S. 2%, year over year, in January. The gains were led by F-series trucks, Bronco SUVs and electric vehicles. Overall, Ford's EV sales more than doubled last month on a year-over-year basis, but they still remain a small portion of its total sales.
Meanwhile, General Motors blew away analyst expectations for its fourth quarter results on Tuesday. GM also announced a $650 million investment in miner Lithium Americas as it ramps up EV and lithium-based battery production. GM, Ford and Stellantis predict half of U.S. sales will be electric vehicles by 2030. Stellantis was formed via the merger of PSA Group and Fiat Chrysler in 2021.
Tesla Stock Extends Rebound
Tesla stock rose 1% on Friday, putting its rebound since the start of January around 90%. GM stock edged down 0.9%, giving it a gain of more than 8% for the week. F stock fell 7.6%, diving to a test of support at its 200-day moving average.
Lucid, the Nasdaq 100's strongest gaining stock in January, fell 2.4% on Friday.
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