The move is a win for Tesla, General Motors and other automakers that had pressed the Biden administration to change the vehicle definitions.

Under the $430 billion climate bill approved in August, SUVs can be priced at up to $80,000 to qualify for EV tax credits, while cars, sedans and wagons can only be priced at up to $55,000.

Treasury said in December it would use Environmental Protection Agency (EPA) CAFE standards to determine if a vehicle was a car or SUV for EV tax credit purposes but said Friday it will now use the "consumer-facing EPA Fuel Economy Labeling standard.. this change will allow crossover vehicles that share similar features to be treated consistently."

Last month, GM urged U.S. Treasury to reconsider classification of its electric Cadillac Lyriq to allow it to qualify for federal tax credits.

The Treasury and Internal Revenue Service in December did not classify the Lyriq as an SUV, disqualifying it from credits because the Lyriq currently starts at $62,990.

Tesla Chief Executive Elon Musk tweeted last month the EV tax rules were "messed up." The five-seat version of the Tesla Model Y is not considered an SUV, while the Model Y seven-seat version is and can qualify for the credit. Musk raised the issue with White House officials during a meeting last week, a person briefed on the matter said.

Treasury said the revised definition will apply to all buyers of EVs since Jan. 1.

(Reporting by David Shepardson)