US: Ford Is Also Running Out Of Federal Tax Credits

Ford is approaching 200,000 plug-in electric cars sold in the US cumulatively since 2012, which is important from the perspective of the federal tax credit.

The incentive of up to $7,500 is available for the first 200,000 units, after which a phaseout procedure is started. Tesla and General Motors' EVs are not eligible for the incentive since 2020 and this year Toyota triggered the phaseout as the third manufacturer. Ford is expected to be fourth, just slightly behind Toyota.

How many Ford plug-ins were sold?

According to data released by the IRS, as of the end of 2021, the company has sold nearly 160,000 plug-ins, including almost 33,000 in 2021.

As we know from the recent Q2 sales report, Ford sold close to 23,000 all-electric vehicles during the first six months of this year and an undisclosed number of plug-in hybrids (Ford and Lincoln).

It means that as of the end of June, the company is at about 182,567 units plus a small and unknown number of PHEVs sold in H1 2022. Let's assume that it might be 185,000 or so total.

That's pretty close to the limit of 200,000. The difference is basically worth one quarter of BEV deliveries (in Q2 it was over 15,000 BEVs).

Q3 or Q4?

In business as usual scenario, Ford is expected to reach the cumulative number of 200,000 units this quarter, or maybe in the fourth quarter.

This should trigger the phaseout, and at some point in 2023 (potentially January 1 or April 1), Ford plug-ins will not be eligible for full federal tax credit amount anymore, but only 50%. By the end of 2023, the incentive for Ford will be completely gone (at least if no one changes the law).

The federal tax credit amount is up to $7,500 per car (the full amount is for plug-ins with a total battery capacity of at least 16 kWh). The minimum requirement is at least 4 kWh battery and capability to recharge from an external source of electricity.

After officially reaching 200,000 units, the full amount is available through the end of the particular quarter, during which the limit was reached, and for the following quarter (so for 3 to 6 months, depending on the date of reaching the limit). Then, the amount will be decreased to 50% for another two quarters (up to $3,750) and to 25% for the final two quarters (up to $1,875).

With the upcoming phaseout of the $7,500 incentive, we might see an additional reason to rush to buy Ford (and Toyota) BEVs in the coming months, which will come on top of the already high demand.

Who's next?

If Ford will be fourth at 200,000, then who might be next? Well, Nissan is pretty well advanced at 173,332 LEAFs as of the end of June, but its sales are relatively low and we do not expect 200,000 this year but rather in the first half of 2023 at the earliest.

More EV News

US: Toyota Sold Over 200,000 Plug-Ins, Triggering Federal Tax Credit Phaseout