U.S. Federal EV Tax Credit Update For January 2019

FEB 21 2019 BY MARK KANE 25

From this year on, plug-in car sales will be affected by the federal tax credit phase out

The first two manufacturers – Tesla and General Motors – already reached the limit of 200,000 plug-in electric car sales in the U.S., which triggered phase-out of the federal tax credit, an incentive that enables a lower effective price of the cars by up to $7,500.

In the case of Tesla, the limit was hit in early July 2018, which fortunately for the company and its customers, allowed it to enjoy the full amount a little longer – almost two quarters (the quarter when the limit was reached and the following quarter).

In the case of GM, the situation was less favorable because the limit was reached at the end of Q4 2018 – so the full amount was available only for the small remaining part of Q4, plus following Q1 2019.

It’s always better to reach the limit in the first days of the particular quarter, especially if you are in a ramp-up phase.

The other biggest plug-in manufacturers are still far from reaching 200,000 sales.

 Available amount of federal tax credit

  • In Q1 and Q2 2019 Tesla models can get only 50% (up to $3,750) of the amount
  • GM models are in the last quarter of full availability of the federal tax credit

Cumulative sales of plug-in cars in U.S. – top manufacturers

The progress for the next four manufacturers indicates that none of them will reach 200,000 sales in 2019.

As we explained in the past, this is how federal tax credit phase out 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.”

Categories: Chevrolet, EV Education, Sales, Tesla

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25 Comments on "U.S. Federal EV Tax Credit Update For January 2019"

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I sure hope GM makes good use of its last full-credit quarters and moves a crap-ton of Bolts in the US. I was hoping to see some really nice lease deals based on that but it seems like GM still isn’t including the credit in the lease.

I really hope so, too. Only bit over a month left, I hope everyone hurries up. At total post subsidy CA sale price of $22K for a car that can do 0-60 in 6.5 seconds, it’s the best deal among ANY car, not just EV.

Even $26K (post tax credit, not CA) is not bad considering the power and acceleration. We know it’s quicker on autocross track than more expensive Focus ST as demonstrated by bro1999.


I see no evidence GM is going “ramp up” production. Sadly, they are likely to just waste their remaining quarters.

1. Looking to confirm VW/Audi/Porsche accumulate under one 200k allotment?
2. How far back are they, from these top six?

A long, long way. I’d have to go into scorecard archives and do all the math, which will take a bit of time. However, it will be some time before the number is high enough to worry about. Even if they all added up together, the number would still be low. Nissan and Mitsubishi or Hyundai and Kia are an alliance, so the brands are counted separately, unlike GM.

It appears VW Group fully owns every one of its brands and is not just an umbrella or alliance of sorts, so all brands may get counted as a whole. Fantastic question btw. If we find out more, we’ll let you know.

(⌐■_■) Trollnonymous

If the dieselgate lawsuits spanned across their brands then the 200k should be shared across their brands.

Agreed. My research supports that.

At their current planned production rates, 5 years if every one of the cars was sold in the US. That is very unlikely, but so is the expectation that current production rates stay static. If they enjoy great success, as both myself and The Mission hope, production rates will increase and sales will grow quickly.

Time to end the $7500 credit. It has almost completely done what it was intended to do, jump start an EV renaissance. Don’t reward the laggards like Nissan, BMW, Ford and the rest.
To make sure the EV revolution doesn’t stall out, a new $3,000 credit for EV’s sold in the US with at least 40 kWh packs sold during the next three years would be a nice replacement, since it would allow Tesla and GM to stay in the credit game. $7500 is kind of overkill now.

(⌐■_■) Trollnonymous

Is there an expiration date for the Tax credit?

It can’t run forever. can it?

No 200,000 units sold is not forever. Congress can change things if they feel the need to go to work.

Would you buy Bolt for $32K (on sale no tax credit), let alone $37K (MSRP)? I wouldn’t, neither would most people. Heck, even $22K post subsidy in CA now (best deal among ANY car) has bunch of Bolts sitting on dealer lots.

I’d recommend $5k per vehicle with minimum 40 kWh pack, next three years. Return the desperately needed EV charger subsidy but this time at ~ $7500 per L3 (50kw min), $2,000 per L2 charger (10kw min) for commercial property and $200 per residential 240V dedicated circuit EVSE. No more incentives for the compliance/tax credit PHEVs with tiny batteries that likely won’t even be plugged in regularly by their owners (I’m looking directly at you, BMW!!).

5k 2019, 4k 2020, 3k 2021…..

>> It has almost completely done what it was intended to do, jump start an EV renaissance. Don’t reward the laggards…

That was not the intent. It’s easy to prove too. Had it been, there would have been an industry-wide limit instead of it being for each automaker. What those tax-credits were actually intended to do was help each of those automakers establish a viable (profitable & high-volume) product of their own, something appealing to their particular customers.

GM squandered that opportunity, wasting their allocation of tax-credits on conquest… vehicles clearly not targeted at their own particular customers. Why would someone loyal to GM switch from their beloved SUV to a compact hatchback or wagon? Intent was not fulfilled.

In other words, the label of “laggard” is grossly inaccurate and it distracts from the true problem. We shouldn’t have to deal with rhetoric people spread without giving thought to origin or purpose. Automakers who saved their tax-credits for something they believed would become a product that could compete with their own vehicles on the same showroom floor should not be misrepresented like that.

If there’s another company worth being listed in this post, it’s probably Honda… if they keep ramping up the Clarity, they could feasibly overtake Toyota and reach 200K before them.

Clarity PHEV is selling well, but so is Prime, so I would not expect Honda to catch Toyota before 200k. They may gain on them but likely not surpass. Clarity EV ain’t gonna help much either.

Do Not Read Between The Lines

well = 2,000/mo. Plenty of years to go.

Honda is just starting….and at this pace it will take 10 years for them to get there.

If the Rivian R1T, as a deposit holder, disappoints me I will go Tesla. The tax credit will not make my decision.

I suggest a structure like this:

At point of sale rebate if $2k for any BEV with at least 150 miles of EPA range. Half for a PHEV with at least 30 miles of EPA range or a BEV less than or equal to 150 miles of range.

Then up to $3k tax credit with income phase out from $100k to $200k for all qualified vehicles., 50% higher for joint filers.

This for 3 years and not per manufacturer, or when qualified cars exceed 5% of the market. Then drops in half for two years, then drops out.

I suggest only for BEV, no income limit, continue until 50% of new vehicles sold are BEV, using this formula.

roll-over tax credit = range in miles at 70 MPH * 30.

Bolt will probably be 200 miles at 70 MPH, rebate = $6K
Tesla 3 LR probably 270 miles, rebate = $8.1K
Leaf probably 110 miles, rebate = $3.3K

This will promote longer range BEV. Since efficiency pays more than just putting in more battery, innovation is rewarded rather than simply sticking in more battery for higher price (ie, ipace)

I do not worry because
Before Tax credit of GM end, (March 31)
Congress will change the Tax credit, It will 7500 for all EV on 2019 and 2020, then will cut in half for 2021 and a half again 2022

I really hope so, but am doubting it would happen. Source?

I don’t think it is necessary. In 5 yrs time, they will be cheaper than gas cars. Have some confidence in EVs people. The price is coming down and everyone will want one. Or would you still prefer to drive a horse?