GM Set to Soon Surpass the EV Tax Credit Cap
GM has sold a total of 186,670 electric vehicles, which is close to the 200,000-model limit for the federal electric vehicle tax incentive
Earlier this summer, General Motors announced that it would be increasing Chevrolet Bolt production by 20 percent during the fourth quarter of 2018. This production increase is being initiated to keep up with a rising consumer demand for the EV.
Still, the recent popularity of the Bolt is not without its drawbacks. For example, GM is rapidly approaching the 200,000-vehicle cap of the $7,500 federal tax incentive for electric vehicles.
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Adopted during the Obama administration, the electric vehicle tax incentive offers a tax credit of $7,500 to consumers who purchase electric vehicle models. While drivers who purchase the Bolt EV will still need to pay at least $37,495 upfront, the incentive offers additional value to them for purchasing a zero-emission model.
However, the incentive has a 200,000-vehicle cap. Once that limit is reached, the tax incentive is reduced by half every six months, until it is eventually discontinued altogether.
At the moment, GM has sold 186,670 of its Chevy Bolt, Chevy Volt, and Cadillac CT6 plug-in hybrid vehicles since the tax incentive was put in place. GM expects to hit the 200,000-vehicle limit sometime later this year or early next year.
GM isn’t the only automaker facing this issue when it comes to EV production. Tesla recently delivered its 200,000th EV earlier this year.
Electric vehicle sales have grown in the past few years due to improving technology. Most importantly, the increased range of these vehicles has reduced the range anxiety that many consumers feel.
It’s currently unknown whether the lack of a tax incentive will harm GM’s electric vehicle sales. While the market share of EVs has roughly doubled during the past few years, that market share has only increased from 1 percent to 2 percent.
Due to the fact that the market for these vehicles is still relatively small, the loss of the tax credit may not be enough to dissuade customers set on buying an EV. Still, GM will have to compete with other brands introducing EVs that have not yet reached the tax credit cap.
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GM’s CEO Mary Barra called for an expansion of the EV tax credit earlier this year. However, no expansion has been adopted up to this point.
Therefore, if you’ve had your eye on a electric vehicle from GM, now is the time to purchase it before the tax credit for these vehicles expires.
News Source: The Detroit News