Toyota will be third automaker to lose US EV tax credit

Toyota sold its 200,000th plug-in electric car in the US, triggering a slow phasing out of the federal EV tax credit over the next 15 months, according to US authorities. Bloomberg† After Tesla and General Motors, the automaker is the third manufacturer to pass this mark.

The phase-out for Toyota has been ill-timed, just weeks after the company’s new electric SUV, the bZ4X, hit the US market. It’s the latest bad EV news to reach the automaker just a few weeks after it was forced to recall the bZ4X due to loose hub bolts that could cause the wheels to come off while driving. Toyota pledged to spend $17.6 billion to roll out 30 battery-electric models by 2030.

The phasing out of federal tax credits begins two quarters after an automaker sold 200,000 plug-in vehicles. Customers of Toyota vehicles eligible for the credit (such as the bZ4X and the plug-in hybrid Prius Prime) can receive up to $3,750 beginning October 1. The maximum available credit will be halved again on March 1, to $1,875, and completely phased out six months later, in October 2023.

The auto industry, including Ford, Stellantis and Toyota, has pressured Congress to lift the cap on the number of vehicles sold before the tax credit begins to wind down. But Toyota, along with GM and Tesla, opposed a proposal from the Biden administration to provide more generous tax credits to customers of EVs made by union workers. (Democratic lawmakers have said that proposal is now dead.)

The EV tax credit was created by the Obama administration in 2009 to encourage automakers to embrace electrification. It also aimed to help consumers by offsetting the cost of expensive electric vehicles, which have sticker prices about $10,000 higher than the industry average.

To that end, the credit was never intended to be permanent, and so a maximum of 200,000 vehicles sold was included. Once a company passes that figure, the tax credit expires over an 18-month period (which goes back to the beginning of the quarter when the 200,000th vehicle was sold). Tesla crossed that threshold in July 2018, while GM reached it in January 2019.

Other automakers that are running out of tax credits are Nissan and Ford, which, according to Bloomberg, sold 166,000 and 157,000 EVs in the US, respectively.

Frank Broholm had acquired considerable experience in writing and editing publications before recruited by The Media Today Chronicle News portal as Editorial Manager. His key task is to conduct effective business reviews based on the most recent business…