General Motors Past 200,000 EV Mark, Plans Tax Credit Phaseout: Report
Tax credits for GM’s electric vehicles will reportedly decrease starting in April and be gone entirely as of the same time next year.
General Motors reportedly passed the 200,000 electric vehicle (EV) sale threshold in Q4 of 2018, triggering an end to its eligibility for the $7,500 federal tax credit.
A source close to GM reportedly told Reuters the news and outlined a 15-month phaseout plan for the tax credit. For the first three months of 2019, customers will still be eligible for the full $7,500 credit, but GM EVs purchased after the undisclosed date in April will qualify for just $3,750 in credit, or half the original amount. That will reportedly be available for the following six months before shrinking to $1,875 in October, with the incentive being dropped completely in April of 2019.
The American automaker sells at present just two models of electrified vehicles: the plug-in hybrid (PHEV) Chevrolet Volt and the battery-powered Chevrolet Bolt EV, of which GM makes a partially-automated derivative named the Cruise AV, which it does not sell to the public. With its November announcement that its Detroit-Hamtramck plant will cease production this June, GM also confirmed that the Volt will exit production on March 1. Its badge-engineered Cadillac ELR brother was discontinued in 2016.
General Motors will release its Q4 2018 sales figures Thursday, which will verify whether the automaker has achieved the 200,000 EV milestone. If accurate, GM will be the second automaker to achieve this volume of sales, second to Tesla Motors. The latter surpassed the 200,000 mark in July, and on Tuesday lost its eligibility for the full credit. To attract customers despite a decreased tax credit of $3,750, Tesla chopped $2,000 off the price of its vehicles, though the net cost of a new Tesla will still cost an extra $1,750.
Both automakers along with electric utilities have called upon Congress to extend the tax credit in order to accelerate consumers' transitions into EVs. Opposition has come from the White House, whose economic advisor Larry Kudlow reportedly seeks to weaponize tax credit cessation as a punishment for GM's decision to close multiple North American factories.
Other detractors of the tax credit point to a congressional report from November which outlined the credit's cost to taxpayers as $375 million in 2016, split between 57,066 EV customers that year. No official numbers are available for 2017 or 2018, but the figures are expected to be greater in both instances, and total as much as $7.5 billion from 2018 through 2022, provided the credit is maintained.
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