DETROIT – The U.S. Treasury stated Friday it’s altering its definition of an “SUV” to make extra electrical automobiles from Tesla, Normal Motors and different automakers eligible for as much as $7,500 in federal tax credit at increased costs.

The choice follows Tesla CEO Elon Musk publicly criticizing the previous requirements on Twitter in addition to automakers reminiscent of GM and Ford Motor lobbying to alter the rules forward of ultimate guidelines being introduced subsequent month.

The change raises the retail value cap to $80,000 from $55,000 for automobiles such because the Tesla Mannequin Y, Cadillac Lyriq, Ford Mustang Mach-E and Volkswagen’s ID.4. Beforehand some or all fashions of those automobiles didn’t qualify as a result of they did not weigh sufficient to be thought-about an SUV by the Treasury’s requirements.

The credit are a part of the Biden administration’s $437 billion Inflation Discount Act, which was authorised in August. Underneath the invoice, SUVs will be priced at as much as $80,000 to qualify for EV tax credit, whereas vehicles, sedans and wagons must be priced at or underneath $55,000.

It is unclear how the choice will impression as much as 20% pricing cuts introduced by Tesla final month that made the Mannequin Y eligible for the credit. Tesla didn’t instantly reply for remark.

Wall Avenue applauded Tesla’s value reductions but in addition was involved that they might begin an EV pricing conflict and stress margins of different automakers, regardless of rising commodity prices for the automobiles. Tesla has loved considerably increased revenue margin on its EVs in contrast with conventional automakers.

Ford stated Monday it could reduce pricing of its Mustang Mach-E by as much as $5,900 to raised compete with Tesla’s Mannequin Y. That is regardless of the corporate’s general EV enterprise not at present being worthwhile, together with some Mach-E fashions promoting at a loss for the corporate.

Ford, in an emailed assertion, stated Friday officers “sincerely recognize their consideration and onerous work” by the Treasury.

GM additionally thanked the Treasury and hailed the modifications: ”The alignment on classification will present the wanted readability to shoppers and sellers, in addition to regulators and producers.”

The Alliance for Automotive Innovation, a lobbying group for many automakers working within the U.S., additionally counseled the choice.

– CNBC’s Chelsey Cox contributed to this text.