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IRS Change to EV Tax Credit Is a Gift for Tesla Stock

The IRS is responsible for implementing the purchase-tax credits available for EVs under the Inflation Reduction Act.

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Justin Sullivan/Getty Images

The Internal Revenue Service does seem to listen to comments when it proposes a rule.

The agency, which is responsible for implementing the new electric-vehicle purchase tax credits passed as part of the Inflation Reduction Act, has redone the eligibility price limits for several EVs. The changes benefit
(ticker: TSLA),
Ford Motor
(F) as well as
General Motors

 Model Y, which is the best selling EV in America, now qualifies for the $7,500 credit if it is priced under $80,000. That essentially means the IRS is giving the Model Y the same tax benefit available to SUV or trucks. Earlier, a Model Y had to be priced below $55,000. That’s the price cap for cars.

The Cadillac Lyriq and the Ford Mustang Mach-E were in the same boat as the Model Y. Other similar-sized vehicles such as the Audi eTron were treated like SUVs in terms of eligibility from the start.

Now both the Lyriq and Mach-E qualify for the credit if they are priced under $80,000.

Confusion over eligibility for the EV credit might have contributed to weak Mach-E sales in January.
delivered 2,626 Mach-Es in January, down 45% from the 4,775 SUVs in December. Ford cut prices on the Mach E late in January after Tesla cut Model Y prices on Jan. 12.

The tax-credit change appears to be helping Tesla stock. Shares were up 5% at $197.77 in late morning trading Friday. The
S&P 500
was off 0.1% and the
Dow Jones Industrial Average
was up 0.2%.

Ford stock was down about 7%, but the shares were also reacting to weaker-than- expected fourth-quarter earnings reported Thursday evening. GM stock was up 0.6%, more than 2% above its low for the day.

Write to Al Root at


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