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

(Credit: Toyota)

Toyota will soon join Tesla and General Motors as automakers that no longer qualify for the $7,500 electric vehicle tax credit. The Japanese automaker is expected to reach the sales cap before the end of June, a company representative said.

After electric vehicle manufacturers reach 200,000 unit sales, they no longer qualify for the EV tax credit. This means anyone buying a Toyota EV after the company reaches 200,000 electric units sold will not receive the credit. Toyota reached the cap by selling plug-in hybrid vehicles, like the RAV4 Prime and Prius Prime.

Tesla reached the 200,000 sales threshold in mid-2018, while GM reached it in December of the same year. The credits are advantageous for companies who 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.

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.

The 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.

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.”

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