Will GM Follow Tesla's Example And Offer Discounts?

Sales

The automaker has hit the 200,000 EV sales threshold. Now what?

Now that 2018 has come to an end, the final sales figures are coming in and one thing is already for certain: General Motors hit the 200,000 total electric vehicle sales figure, which will now trigger a phase-out of the $7,500 federal tax credit over the next 15 months. Reuters has confirmed this with GM sources.

That tax credit will reduce to $3,750 in April, and then lower to $1,875 in October for another six months. By April 2020 the credit will be gone entirely. The automaker knew it would likely reach that sales threshold by the end of the year, so this is not coming as a complete surprise.

It’s important to know that GM did not sell 200,000 EVs, specifically the Chevrolet Bolt, in 2018 but rather this figure represents all EV sales since 2010. The 200,000 per manufacturer figure phase-out mark was set by Congress back in 2009. The only other automaker to have also hit this threshold is Tesla, which did so last July. Both companies have lobbied Congress to lift the cap or extend the existing credit but to no avail.

In fact, Tesla’s credit dropped to $3,750 last Tuesday, but the California-based carmaker doesn’t believe customers should be forced to pay a penalty. Therefore, it just announced it will cut prices on its vehicles by $2,000. Will GM decide to do the same six months from now? Perhaps, but CEO Mary Barra likely has another long-term solution in the works. Remember when GM announced those plant closures and layoffs in November? Of course you do. Everyone does, and she’s still taking a lot of criticism for the move.

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However, Barra understands the need to restructure the company while it’s healthy. No one wants to see another bankruptcy. This restructuring will allow GM to allocate additional resources to EV matters, including boosting production to meet demand and other areas that can lead to lower prices in the future. Meanwhile, production of the plug-in hybrid Chevy Volt will come to an end this March. An all-new EV, riding on an also new platform, is slated to go on sale in 2021.

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