6 Automakers Closest To Losing The Federal Tax Credit – May 2018
This year, the first manufacturers will hit cumulative sales of 200,000 plug-in electric cars in the U.S.
Hitting 200,000 will trigger the phaseout period of the $7,500 federal tax credit.
**UPDATE – This post has been updated to include sales through the end the May 2018.
Currently, all of the plug-ins vehicles sold in the U.S. are eligible for full federal tax credit of up to $7,500 (depending on battery capacity – see actual credit amount for each vehicle here).
But when a particular manufacturer sells 200,000 units, the full amount will be available through the end of that quarter and for the following quarter. Then, all new plug-ins from that manufacturer will be eligible for just 50% of the per-vehicle credit amount – for only two more quarters. After that, the credit diminishes even more until it’s eventually gone for that particular manufacturer.
As we explained in the past, this is how it all works.
“Each independent automaker’s eligible plug-in vehicles receive a federal credit (up to $7,500) federal credit – until the 200,000th plug-in is registered inside the US, when a countdown for phaseout of the credit begins.
At the time of the 200,000th sales, and so as not to disrupt/confuse those buying the EVs, that full $7,500 credit continues through the end of the current quarter and to the completion of the next quarter. After this period ends the “phase-out” begins, meaning the credit is reduced to $3,750 for the next 6 months, then to $1,875 for the next 6 months before expiring completely.
During any part of the phase-out process (between sale #200,000 and the calendar expiry date), the OEM is free to BUILD AND SELL AS MANY EVS as they can/want, receiving the applicable incentive amount.”
And here’s the phaseout, as explained by the IRS:
The qualified plug-in electric drive motor vehicle credit phases out for a manufacturer’s vehicles over the one-year period beginning with the second calendar quarter after the calendar quarter in which at least 200,000 qualifying vehicles manufactured by that manufacturer have been sold for use in the United States (determined on a cumulative basis for sales after December 31, 2009) (“phase-out period”).
Qualifying vehicles manufactured by that manufacturer are eligible for 50 percent of the credit if acquired in the first two quarters of the phase-out period and 25 percent of the credit if acquired in the third or fourth quarter of the phase-out period. Vehicles manufactured by that manufacturer are not eligible for a credit if acquired after the phase-out period.
There are six manufacturers most advanced in progressing towards 200,000.
6. BMW Group – 67,725
5. Toyota – 80,193
4. Ford – 107,995
3. Nissan – 120,119
2. General Motors (GM) – 182,223 (includes estimates for month of April 2018 and May 2018, but guaranteed accurate at 176,083 through end of March 2018 when GM decided to report sales quarterly)
1.Tesla – 194,021 (estimated, including Tesla Roadsters not yet shown on the graph)
If Tesla understands the value of that $7,500 credit, then it will likely limit deliveries in June, in order to hit 200,000 in July, thus making use of three months of the $7,500 amount, instead of just a few days.
General Motors should be second to the 200,000 level, some 3-6 months after Tesla.
It’s likely Nissan will be third, with the expected emergence of the new LEAF.
After that, it’s not so clear which automakers will be next.
We’ll update this list on a monthly basis as new sales figures come in. You can keep track of U.S. sales here and remember to check out our Compare EVs page for information such as federal tax credit amount, pricing, range and more.
*Eric Loveday contributed to this report