General Motors has reached a significant landmark in electric vehicle sales, which will have an effect on their affordability. GM sold a grand total of more than 200,000 electric cars in 2018, which means the $7,500 federal tax credit will be phased out over the course of the next 15 months.
The tax credit doesn’t suddenly go away — it will gradually be phased out in steps. This April, the tax credit will be cut in half to $3,750, and then cut in half again to $1,875 in October. The $1,875 tax credit will remain for six months and drop to zero by April of 2020.
The plan to phase out the federal EV tax credit after a manufacturer hits a certain production number was put in place by the U.S. Congress back in 2009. The idea is to prop up environmentally-friendly EVs and make them more affordable for the average American car buyer and then let them sink or swim after selling 200,000 units.
So far, the only other manufacturer to hit the 200,000 EV-sales mark is Tesla upon the release of its higher-volume Model 3. Tesla and GM have both been lobbying Congress for the cap to be lifted so both manufacturers can continue selling EVs with the full $7,500 tax credit until they can figure out how to make the cars more affordable, thus keeping them attractive to potential buyers.
At the moment, there’s no indication from Capitol Hill that these caps will be raised and it looks like when the federal tax credits on EVs go away, they’ll be gone for good. If you’ve been thinking about buying a Chevrolet Bolt EV, you might want to hurry so you can save a few grand before the lucrative tax credit disappears.