General Motor's EVs Are Only Eligible for 25 Percent of the Federal Tax Credits Now
Federal tax credits play a large role in the popularity of electric vehicles. Modern battery-powered machines are a lot more expensive than gasoline-powered vehicles, despite recent decreases in pricing. Being able to get $7,500 toward the purchase of a new electric vehicle, if you qualify for the maximum amount, can drastically help make an EV a viable option for consumers. Unfortunately, for General Motors electrified options, federal tax credits have just been cut down to 25 percent of the full credit.
GM Sees Its Federal Tax Credit Dwindle
For electric vehicle consumers, the federal government offers an enticing $7,500 federal tax credit. It's not available to everyone and the way the rebate works is confusing, but it's definitely helped electric cars become more popular in the United States. For automakers, things aren't as complicated. When a brand hits 200,000 vehicles sold, it marks the beginning of rollbacks for the EV tax credit.
For General Motors, that 200,000-mark was crossed in Q3 2018. Hitting that mark set off a cascade effect that saw federal tax credits drop to $3,750 in the second quarter of 2019 and now that the fourth quarter is underway, GM's federal tax credit has dropped again. Now, consumers looking to purchase a Chevrolet Bolt or a Volt are only able to get a maximum of $1,875 – 25 percent of the full amount.
That's unfortunate news for Chevrolet, as the automaker just updated the Bolt to have more range. For the 2020 model year, the Bolt saw its range go up from 238 miles to 259 miles. The roughly 8 percent improvement saw the Bolt become a better competitor to the Tesla Model 3, Hyundai Kona EV, and Kia Soul EV.
Federal Credits Put GM In A Difficult Spot
For the Volt, it's not returning for a 2020 model year. So whatever 2019 models are available at dealers new are the last vehicles that will be eligible for the remaining federal tax credit. Looking at GM's recent updates and decision to discontinue the Volt, one can't help but think that the American automaker wasted its federal tax credits.
Either way, the $1,875 federal tax credit won't last long. It's only available for the next two quarters, which means that after March 31, 2020, no government discounts will be available on any General Motors electrified vehicle – even all-new EVs that come out down the road.
General Motors is only the second automaker to surpass the 200,000-vehicle mark for the federal tax credit. Tesla was the first brand to pass the figure and will see its federal tax credit disappear entirely at the end of 2019. Nissan, thanks to the Leaf, is in third place, with roughly 136,000 electrified vehicles sold.
Ford's one of the few brands that will give consumers the ability to get the most out of their electric credit, as the brand is still working on coming out with a competitive EV. If there's one thing Ford can take from GM, it's that coming out with one EV instead of a few in a short period of time gives consumers more opportunity to get the full tax benefit.
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