Will EVs Lose Their Tax Credits?

Much like an extended family getting together for the holidays, we try to avoid talking about politics on this blog at all costs.

We like to keep the focus on exciting new cars that are coming soon, or helping shoppers get the best deal on cars. Of course, we also love showcasing the best in car culture and analyzing changing trends.

Sometimes, though, a political development comes along that forces us to talk politics, because it affects car shoppers around the entire country. Today is one of those days.

But worry not, friends, because we will withhold judgment and opinions and present only facts.

Electric vehicles are gaining popularity and will soon fill showroom floors and represent nearly all major brands. One of the biggest selling points of electric cars, aside from driving emission-free, is the $7,500 federal tax credit that has dramatically reduced the price of taking home a brand new EV.

However, Congress is currently debating a new tax bill, and one of the potential casualties is that EV tax credit.

The credit was implemented with a 200,000-vehicle cap for each automaker, and only Tesla has come close to that limit. The rest of the automakers have plenty of room to offer the credit, and are counting on it, for the new EVs coming down the pipe. An end to the tax credit could be devastating for sales of those cars.

Bloomberg wrote,

[L]ook at what happened in Georgia. Electric car sales there were growing briskly until the state cut its $5,000 electric vehicle tax credit in June 2015. Sales crashed from as many as 1,400 electric cars a month statewide to fewer than 100 the month after the incentive was axed.

Automakers fear a similar sales plunge if the federal tax credit goes away. Losing the credit would crush sales of electric cars just as most major automakers are beefing up to sell a slew of EVs over the next five years.

Americans love their gas-guzzling SUVs and their relatively cheap gas, which has made EVs a tough sell. The tax credit may be keeping the market artificially alive. Take off the life support and, well, there’s not a lot of reason left to buy electric.

If that new tax bill passes, the EV tax credit will end after the 2017 tax year.

Would you be interested in an electric car if the tax credit disappeared?


Find Certified Pre-Owned Cars and Used Cars in your area at CarGurus.

Shopping for a new vehicle?
Bring along CarGurus’ mobile app to help check prices, find good deals, and research cars on your smartphone.

Leave a Reply

Your email address will not be published. Required fields are marked *


This site uses Akismet to reduce spam. Learn how your comment data is processed.