After largely being left out of the updated 2024 U.S. electric vehicle tax credits, General Motors has announced it will front the cost of the $7,500 tax credit out of pocket to keep its electric vehicles competitive, according to the Detroit Free Press.

“The Cadillac Lyriq and Chevrolet Blazer EV will temporarily lose eligibility for the clean vehicle credit on Jan. 1, 2024, because of two minor components,” a GM rep told the Free Press. “While we await final rules, GM has pulled ahead sourcing plans for qualifying components in early 2024 and will advocate for our dealers and customers who purchase vehicles built ahead of the new guidance.”

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On Jan. 1, the Internal Revenue Service (IRS) announced that only a handful of EVs are eligible for the incentive starting this year. At the time of writing this article, the only battery-powered cars in GM’s portfolio that are eligible for the entire $7,500 tax credit when buying instead of leasing are the soon-to-be-discontinued Chevrolet Bolt EV and Bolt EUV, leaving newly introduced models like the Chevrolet Blazer EV and Cadillac Lyriq out of the picture.

Sales of both the Blazer EV and Lyriq, which are based on the company’s new Ultium platform, have been on the rise in the previous quarters but the Bolt EV and Bolt EUV continue to make up the bulk of total electric sales.

In the fourth quarter of last year, GM sold a smidge under 20,000 EVs, but the bulk of sales (12,551 units) was represented by the same Chevy Bolt EV/Bolt EUV duo that’s about to be retired. By contrast, the Cadillac Lyriq saw 3,820 sales in Q4, while the Chevy Blazer EV registered just 463 sales.

Keeping its up-and-coming EVs at a competitive price is of utmost importance, especially since GM has had major headaches trying to ramp up production of its Ultium-based models. The Cadillac Lyriq, for instance, debuted in production form in 2021 but deliveries in the United States started a year later at a snail’s pace, and production numbers climbed in the thousands in 2023. 

In other words, it’s been a rough few years for GM on the EV front, and the new federal tax credit rules won’t make it any easier for the company that’s committed to becoming all-electric by 2035.

On the other hand, prospective customers can now feel the effects of GM’s discount right when buying a new EV, as opposed to having to wait to file for credit on tax returns. That said, dealers can now apply the tax credit at the point of sale in 2024 and then get a refund from the IRS, turning the tax credit into an instant discount for the buyer instead of something to be claimed later.

The GM spokesperson confirmed to the Free Press that the IRS’s new rules do not apply to leasing and that the automaker is working on sourcing two components from other locations so that both the Lyriq and Blazer EV can be once again eligible for the $7,500 tax credit when buying.

To keep customers happy, the American car manufacturer told its dealers that it would “provide $7,500 for any vehicles that became ineligible on Jan. 1, 2024, as a result of the new guidelines.” That’s if shoppers can actually get their hands on a new GM-made EV that isn’t a Bolt EV in the first place. With a slew of software problems that were experienced by our very own Kevin Williams while driving a brand new Blazer EV, leaving him stranded less than 48 hours after starting his journey, the automaker issued a stop-sale order for what is considered one of its most important new EVs.

The updated rules mention that for an electric vehicle to be eligible for the federal tax credit, it must not contain battery components from a so-called “foreign entity of concern” (FEOC) like China, Russia, or Iran. Besides battery-powered vehicles made by General Motors, the new rules also affected the Ford Mustang Mach-E and the Tesla Model 3, with fewer versions eligible than before.