Toyota and Lexus Are Slowly Losing Their EV Tax Credits
Toyota announced that it has surpassed the EV sales threshold to continue to qualify for the full $7,500 tax, but has no plans to slow down its plan for EV development.
Toyota
and its luxury offshoot Lexus have hit a remarkable milestone of 200,000 electric vehicle sales, but with it comes an unfortunate consequence. The Japanese automaker
joins Tesla and General Motors
as the latest automaker to sell over 200,000 electric vehicles (EVs), plug-in hybrid vehicles (PHEVs), or hydrogen fuel-cell vehicles, exhausting its allotted $7,500 available tax credit on electric vehicles. Car ownership super app
Jerry
dives into the details of Toyota’s announcement, what it means for the brand, and how the increasing scarcity of available federal tax credits will impact automakers and consumers alike. Toyota’s path to 200,000 is unusual
Prior to Toyota’s announcement, industry leaders Tesla and General Motors were the only two to have exceeded the limit thus far, but the CEOS of General Motors, Ford Motor, Chrysler parent Stellantis and Toyota Motor North America recently wrote an open letter to congressional leaders begging them to extend the cap.
Toyota’s situation is unique, however, as the brand has sold barely any pure electric cars. Toyota reached the mark almost entirely through the sales of plug-in hybrid vehicles like the
RAV4 Prime
.Its first mainstream BEV, the
bZ4X
, was just released this year, but has already been subject to a dangerous early recall
. Toyota is currently in the process of collecting the bZ4X models sold to fix the defect. As far as other manufacturers who may cross the threshold soon, it's possible that both Nissan and Ford may hit 200,000 before the end of 2022.
Toyota and Lexus still have big plans for EVs
While an early recall on its first EV and the expiration of the tax credit doesn’t bode well for Toyota and Lexus, the brand isn’t slowing down on creating new EV concepts.
Not only did the company tease 17 EV concepts last year, but it has spent much of its time and money working on technology that could improve the efficiency of EVs overall.
A next-generation solid-state EV battery, like the one Toyota is working on, could be used to create a lighter, faster-charging EV with more than double the range of today’s electric cars and eliminate the use of controversial rare earth minerals like lithium and nickel.
Can you still get a tax credit on a Toyota EV?
The answer is yes, but you’ll need to act soon.
While Toyota has publicly announced it has crossed the 200,000-car market, regulators have yet to officially verify that number. When a manufacturer sells its 200,000th qualified vehicle, the full $7,500 discount is no longer available, but you can still get some savings for 18 months from the date of the IRS decision.
On the day of the decision, the tax credit reduces by half to $3,750 for six months. It then halves again to $1,875. The $1,875 credit hangs on for another six months before finally ending.
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