Another Company Looks for the Tax Credit Extension

In 2008, the Federal Tax Credit for the purchase of a hybrid or EV model was signed into law, but a limit was put on this credit.

Any company offering models that would receive the credit was limited to 200,000 qualifying models to be sold. Now, ten years later, we see that there may be more than one company that will no longer be able to offer the full $7,500 tax credit to its customers when they choose to buy a vehicle that expected to be able to help save the environment.

GM Joins Tesla at the Limit

In January, Tesla became the first company to reach the limit of the tax credit and have it reduced to half what it was. Since that time, the tax credit offered to Tesla customers has only been $3,750. This is bad news for those Tesla customers who have been waiting for the Model 3 to be what’s offered for the drive desired. As of now, the credit has been reduced for Tesla a second time to only $1,875 that can be offered to customers that want to enjoy the drive in one of the three Tesla models that qualify.

What does GM offer that puts them in jeopardy of reaching the tax credit limit? The Chevrolet Volt and the Chevrolet Bolt EV are the two models that currently receive the credit when sold. By the end of this year, there will have been enough of these two cars sold that the tax credit will be cut in half for them and GM customers will only receive $3,750 instead of the full tax credit that’s been enjoyed for the past ten years. This limit is something that we should have known was going to be reached eventually.

Is Anything Being Done?

While the GM and Tesla customers that want to drive hybrid and electric cars are no longer able to receive the full credit, there are three proposals being considered in Congress to allow the credit to continue in two different ways. The first of these is a point of sale rebate that would subtract the $7,500 at the time of sale and be offered as an unlimited incentive for the next ten years. The second proposal is to allow the credit to be unlimited until 2022 because in 2023 the tax credit will be deleted from the program altogether. A third proposal is aimed at doing away with the tax credit altogether.

The Right Way to Continue Progress

Hopefully, those that hold positions in Congress will see fit to approve either the first or second proposal. The electric vehicle market is finally gaining ground and beginning to see a positive result, which shouldn’t be halted by a lack of tax credits offered. While we wait for the results of the proposals both GM and Tesla will be able to continue to offer tax credits, but Tesla has been reduced to the 25 percent credit while GM still has the full credit to offer for a few more months.