Toyota will join Tesla, GM in losing EV tax credit after it reaches sales cap

Toyota to join GM, Tesla in no longer receiving the EV tax credit
Toyota sales cap to reach before the end of June

As Toyota will reach the sales cap before the end of June this year, it will soon join GM, and Tesla is not qualifying for the EV tax credit. It is the $7,500 electric vehicle tax credit for manufacturers who do not reach 200,000 unit sales yet. Once the target reaches unit sales, the manufacturer is not eligible for the credit.

Toyota will join Tesla, GM in losing EV tax credit after it reaches sales cap
Image credits- Clean Technica

On the other hand, Tesla reached the 200,000 sales threshold in mid-2018, while GM reached it in December of the same year. These credits are advantageous for companies that offer competitive electric powertrains. But as the industry continues to transition to more EVs on the road, there is a relatively short span of time before companies begin reaching that figure. Tesla sold over 310,000 EVs in Q1 2022 after releasing its delivery figures last year. GM has had a strong presence in EVs prior to Tesla’s overwhelming domination of the sector. The Chevrolet Bolt EV contributed to GM’s EV sales for many years. However, the company has lagged behind in its most recent developments, struggling to ramp production and combating battery issues from suppliers.

Tax credit program

There has been some discussion in the White House regarding restructuring the EV tax credit. President Joe Biden’s Build Back Better plan offered a considerable revision to the $7,500 tax credit program, bumping the amount of the program up to as much as $12,500 under certain conditions, with the cap being eliminated altogether but phasing out over several years. The Build Back Better plan passed the House of Representatives but stalled in Congress following a lack of support from Joe Manchin, a Democrat from West Virginia.

Furthermore, revised terms would have boosted the amount of the credit to $12,500: $7,500 for the electric vehicle, an additional $2,500 for vehicles assembled within the United States, and another potential $2,500 for cars built at production facilities whose workers are members of or are represented by a labor union. Stabenow’s proposal aims to “level the playing field” for electric car makers as the gas-powered companies have ruled the automotive industry for 100 years. A century ago, there was a choice between electrification or gas-powered cars, and automakers chose to utilize fossil fuels as a power source. Bob Carter, the Toyota representative that announced the automaker would soon reach its 200,000 vehicle cap, said it fought against the union portion of the credit, according to the Associated Press. “It just needs to be a level playing field,” Carter, who is the head of North American Sales for Toyota, said. “We are not anti-EV credits.”