In order to encourage electric vehicle sales, the U.S. Treasury offers a tax credit applicable toward the purchase of most EVs, so long as the vehicles meet certain criteria. Buyers of the Cadillac Lyriq have been able to take advantage of the $7,500 Federal EV Tax credit since its introduction for the 2023 model year, but the Lyriq will temporarily lose its eligibility at the start of the 2024 calendar year.
Earlier this month, the U.S. Treasury released new guidelines detailing the criteria EVs must adhere to in order to remain eligible for the Federal EV Tax Credit, effective January 1st, 2023. The new guidelines concern battery sourcing restrictions with the intention of making U.S. EV supply chains less dependent on imports.
Under the new guidance, electric vehicles with battery components sourced from foreign entities of concern (FEOC), like China, Russia, North Korea and Iran, will not qualify for the full EV tax credit. This also encompasses ownership of a raw material producer or battery component manufacturer, regardless of the supplier’s physical location.
Cadillac indicated that the Cadillac Lyriq will lose its eligibility due to minor components within its battery. The luxury marque is working to remedy this issue, and has pulled ahead sourcing parts for qualifying components. As such, the Cadillac Lyriq is expected to become eligible for the tax credit once again in early 2024.
“Treasury proposed strict rules disqualifying all EVs with certain foreign battery content including low-value components, which effectively means most EVs will not be eligible beginning on January 1st,” a Cadillac spokesperson was quoted as saying.
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