Polestar Automotive Holding Uk Plc (NASDAQ:PSNY) shares are trading higher by 2.87% to $6.45 Friday morning amid strength in EV stocks after the Treasury Department announced it is raising the price cap for EV tax credits to $80,000.

What Happened With EV Tax Credits?

The U.S. Treasury Department updated the vehicle classification standard used to determine the applicable Manufacturer Suggested Retail Price (MSRP) limitation for clean vehicle tax credits available under the Inflation Reduction Act.

On December 29, 2022, the Treasury says it published a notice of intent to propose regulations containing information for consumers and manufacturers in advance of the January 1, 2023, effective date of changes to the clean vehicle credit under section 30D of the tax code.

The notice of intent provided an expected vehicle classification standard, based on existing EPA CAFE standards, for the purpose of determining whether the vehicle is a sedan, SUV, or other type of vehicle and subject to the $55,000 or $80,000 MSRP limitation.

The Treasury says this change will allow crossover vehicles that share similar features to be treated consistently.

The Treasury also says all vehicles that were eligible under the MSRP limitations prior to today's notice remain eligible under the updated standard.

According to data from Benzinga Pro, PSNY has a 52-week high of $13.36 and a 52-week low of $4.00.