Cadillac Lyriq EV again eligible for $7,500 federal tax credit

The Cadillac Lyriq midsize electric crossover has regained eligibility for the full federal $7,500 tax credit on purchases of new electric vehicles, General Motors said Wednesday.

Buyers of the Lyriq temporarily lost access to the EV consumer tax credit starting Jan. 1 because two minor components did not meet new battery sourcing rules effective this year. GM had said the Lyriq was expected to comply with the rules early this year after pulling ahead a change in how those components are sourced.

"I'm pleased to report that today, all of the Cadillac Lyriqs that we're producing are now compliant," GM CFO Paul Jacobson said Wednesday at a Citi investor conference.

"It's an example of how we can be nimble within our supply chain and within our allocations to make sure that we're maximizing the benefits," Jacobson said. "Being able to close that gap in just six weeks was a pretty impressive effort by the team."

Jacobson said GM had built about 25,000 Lyriq and Chevrolet Blazer EV vehicles that did not comply with the updated sourcing rules. Along with the Lyriq, the Blazer EV midsize crossover also temporarily lost eligibility, though that vehicle has been on a stop-sale since December to repair a software quality issue. 

GM provided an equivalent $7,500 incentive to Lyriq buyers in the meantime, which Cadillac said will continue to be offered on vehicles built before the sourcing change was completed.

"By offering this incentive, we expect to maintain momentum and reinforce our commitment to the future of EVs," John Roth, vice president of global Cadillac, said in a statement Wednesday.

GM reported 9,154 Lyriqs were sold in the U.S. last year — 3,820 of them in the fourth quarter.

Roth told Automotive News this month at the NADA Show in Las Vegas that improved availability of the Lyriq helped it reach about 19 percent of Cadillac's U.S. retail sales in January, from 12 percent at the end of 2023.

Jacobson said Wednesday that achieving positive variable profit on its EVs, which excludes fixed costs, in the second half of this year is “the No. 1 thing that we’re laser-focused on right now” to demonstrate to investors that the automaker is on track to reach its EV margin goals next year. GM has said it anticipates mid-single-digit EV margins in 2025.

GM plans to produce 200,000 to 300,000 of its Ultium-based EVs from Chevrolet, Cadillac, GMC and its BrightDrop commercial electric van unit this year in North America.

“We have built manufacturing capacity and assembly capacity, and now our job is to grow into it,” Jacobson said at the Citi conference.

“We've got to be careful not to blindly play the volume game. And we're carefully looking at what adoption looks like, but also what the demand for our vehicles are,” he said. “We feel good about that demand path and we don't need to grow significantly in the market to get [200,000 to] 300,000 vehicles out there this year, and we think we can do it with stable pricing.”