Your son probably started off well this year because he was able to handle the easy and familiar work. However, when reading became more challenging, once again he was facing the same problems that went untreated last year.
Motivation is not the issue. Go back to the school and talk to the teacher and/or principal to insist that your son be immediately tested to pinpoint why he's still having problems learning to read. Then, the school can use test results to formulate a plan to improve his reading skills. Your son may need to be taught using a different method. Perhaps he needs more phonics instruction or would thrive with a whole language approach. His reading problems could be so severe that they will need to be handled by the school's reading specialist instead of his teacher.
Children should not be labeled as learning disabled just because they're struggling with a subject. Your son could have a learning disability that's causing him to have problems with reading. Discuss this possibility with his teacher. Either you or the teacher can request that he be evaluated for a learning disability.