GM says it built about 20,000 electric vehicles that did not qualify for tax credits

General engines said the Detroit automaker has built about 20,000 electric vehicles (EVs) so far this year that were ineligible for EV tax credits due to battery purchasing requirements.

GM lost access to federal tax credits for nearly all of its electric vehicle models on Jan. 1 when new requirements from the U.S. Treasury Department went into effect and made many electric vehicles ineligible for tax credits. Paul Jacobson, GM’s chief financial officer, said GM built about 20,000 vehicles in a 60-day period this year that did not qualify for the honor.

Despite GM’s EVs losing eligibility for the tax credits in the first part of this year, GM said it has since regained eligibility for many of its EVs, including the Chevrolet Blazer EV and the Cadillac Lyriq, after making changes had made in its purchasing policy to comply with regulations.

The sourcing requirements are included as part of the Inflation Reduction Act and require that automakers cannot source battery components from foreign entities of concern while remaining eligible for the EV tax credit.

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General Motors headquarters

GM said it made about 20,000 electric vehicles that did not qualify for tax credits before it reworked its purchasing to regain eligibility. (Paul Hennessy/SOPA Images/LightRocket via Getty Images/Getty Images)

It also set requirements for the percentage of applicable EV battery components that must be manufactured or assembled in North America.

For 2023, the applicable rate was 50%, and this increases to 60% for 2024 and 2025. From there it will increase by 10 percentage points annually until it reaches 100% in 2029.

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The EV tax credit rules also include a requirement that critical minerals in the battery be mined or processed in the US or in a country with which the US has an agreement. free trade agreement or recycled in North America.

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GM worker at the factory

GM said federal EV tax credits were a key factor in the automaker’s push to reach breakeven for North American EVs later this year. (Bill Pugliano/Getty Images/Getty Images)

The battery purchasing threshold started at 40% in 2023, rose to 50% this year and will increase by 10 percentage points each year until it reaches 80% in 2027.

It also prohibits EV tax credits for any vehicle containing battery components containing critical minerals extracted, processed or recycled by a foreign entity of interest.

GM did not immediately respond to a request for comment.

General Motors Fairfax

GM said it has changed battery purchasing to regain eligibility for the EV tax credit for many of its vehicles. (Steve Fecht/General Motors via Getty Images/Getty Images)

GM and Detroit rival Ford recently expressed openness to partnerships to compete with China in electric vehicles.

“We can have a competitive battery situation,” Ford CEO Jim Farley said. “We can move to common cylindrical cells which can add a lot of leverage to our purchasing capabilities. We may have to do this with another OEM (automaker).”

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GM CEO Mary Barra said last month that the automaker may be able to break even North American EVs in the second half of 2024 if it can reach an annual production rate of 200,000 to 300,000 vehicles and continue to benefit from federal EV subsidies under the Inflation Reduction Act.

Reuters contributed to this report.

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