GM Will Reach Electric Car Tax Credit Limit This Year

Sean Szymkowski
by Sean Szymkowski

General Motors has confirmed it will reach the threshold for the U.S. federal electric car tax credit this year.

By the end of 2018, GM told Green Car Reports on Wednesday it will sell its 200,000th qualifying vehicle, which will trigger the tax credit’s sunset period. Come April 2019, Chevrolet Bolt EV and Chevrolet Volt models will only receive a $3,750 tax credit.

The tax credits were signed into law as part of the Energy Improvement and Extension Act of 2008 and feature a built-in phase-out period. The credit is reduced by half in the first six months after an automaker sells 200,000 qualifying cars. Then, the credit is reduced by 25 percent to $1,875 six months later. Come April 2020, GM will not have any tax credits to disperse to electric car and plug-in hybrid buyers.

GM will become the second automaker to reach the tax credit ceiling following Tesla’s news it reached the threshold earlier this year. In January 2019, Tesla’s credit will be reduced to the $3,750 figure.

However, GM has been outspoken for the need to extend the tax credits as electric cars really begin to reach the market. Without any reform, the lack of a $7,500 tax credit could put GM at a disadvantage compared to other automakers just now rolling out electric cars. The automaker was an early beneficiary of the tax credit with the Volt plug-in hybrid.

ALSO SEE: Republican Bill Proposes Lift To Electric Car Tax Credit Cap

So far, three proposals have been made to reform the electric car tax credit. The first proposal from a Democratic representative called for the credit to turn into a point-of-sale rebate. Thus, $7,500 would be subtracted from the sales price at the time of purchase with unlimited incentives for all automakers for 10 years.

The other two proposals come from Republican senators. The first aims to lift the 200,000-vehicle cap and provide unlimed $7,500 tax credits until 2022. In 2023, all automakers would lose the credit regardless of when they begin selling electric cars. The final proposal actually aims to do away with the credit altogether. Another Republican senator aims to scrap the credit and tax alternative-fuel vehicles as they do not pay into the gas tax.

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Sean Szymkowski
Sean Szymkowski

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