GM's EV Tax Credit Is About To Run Out

Industry News

How will the company fare without a $7,500 EV discount?

If you buy an electric car in the United States, you are entitled to a $7,5000 tax credit. The credit was put in place back in 2009 as a way to help boost EV and plug-in hybrid sales. However, the credit only remains in place up until an automaker sells 200,000 EVs or plug-in hybrids. Automakers like Tesla are starting to blow past this number thanks to strong sales of more affordable cars like the Model 3.

After an automaker hits 200,000 sales, the incentive drops by 50% until it is ultimately phased out. Tesla was the first automaker to have to worry about this happening, but Green Car Reports says that GM will have cause for concern as well.

GM is on pace to reach 200,000 deliveries by the end of this quarter. Based on the rules of the credit, this means GM EVs and plug-ins will only be entitled to a $3,750 tax credit as of April next year. That will remain for two quarters, before dropping to $1,825 for two more quarters and then disappearing entirely.

Unless the law is updated, this means if you are in the market for a Chevy Volt or Bolt, you will only receive a $3,750 credit after April and a $1,825 credit after October of 2019.

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The US government is looking to kill off the credit entirely, but with several automakers set to reach the 200,000 delivery mark anyway, it seems like killing it would be waste of time. After GM, Nissan will be the next carmaker to hit the 200,000 number, though Nissan doesn't have any plug-in hybrid models to speed up sales. Toyota could also catch up, with the Prius Prime now outselling the Chevy Volt.

GM hopes it can advocate for the continuation of the tax credit. “We feel the tax credit should be modified so all customers continue to receive the full benefit,” said Jeannine Ginivan, GM’s public policy spokesperson. “We look forward to working with members of both the House and Senate to find a bipartisan solution that works for everyone.”

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