New EV tax credits: Car dealers ‘don’t have the answers’

Treasury and the IRS sought to help consumers with a new list of vehicles that may be eligible as of Jan. 1 or later. However, the list has raised concerns over how the vehicles are being classified.

Treasury did not classify the Cadillac Lyriq as an SUV, for example, meaning its retail price cannot exceed $55,000. The Lyriq, which Automotive News classifies as a midsize crossover, starts at $62,990.

The department used corporate average fuel economy, or CAFE standards, “which are preexisting — and long-standing — EPA regulations that manufacturers are very familiar with,” a Treasury spokesperson said. “These standards offer clear criteria for delineating between cars and SUVs.”

General Motors said it is addressing these concerns with Treasury and hopes that “forthcoming guidance on vehicle classifications will provide the needed clarity to consumers and dealers, as well as regulators and manufacturers.”

The Alliance for Automotive Innovation, which represents GM and other major auto companies, said automakers should self-certify to Treasury what classification a vehicle is marketed as, according to comments submitted to the department in November.

“There’s a great many that are in the ‘other’ classification, and that’s largely due to crossovers and SUVs causing a little bit of consternation about how they’re going to ultimately be viewed by the government,” said John O’Donnell, CEO of the Washington Area New Automobile Dealers Association, adding that he’s “very optimistic” many of the vehicles will end up with a “favorable” classification.

Meanwhile, Cadillac dealers such as Inder Dosanjh said customers interested in buying the Lyriq are frustrated.

“Sometimes customers think we’re making this stuff up and then we have to take them to the IRS website and show it to them,” said Dosanjh, CEO of Dosanjh Family Auto Group. “We’re spending a lot of time explaining to customers why Treasury thinks it’s a car, not an SUV.”

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