Toyota hits EV tax credit cap


All good things must come to an end. Following in the footsteps of General Motors and Tesla, Toyota will soon bid farewell to the federal electric vehicle tax credit.

Toyota has reached the cap of 200,000 units on electric and plug-in hybrid vehicles eligible for a $7,500 federal tax credit, Bloomberg reports, citing its own data and a later confirmation from Toyota. A Toyota spokesperson did not immediately return Roadshow’s request for comment. Currently, Toyota offers three vehicles eligible for the tax credit: the Prius Prime and RAV4 Prime plug-in hybrids, and the BZ4X electric SUV. Lexus, Toyota’s luxury subsidiary, also offers an NX plug-in hybrid crossover.

So what happens from here? Well, the federal tax credit hasn’t officially disappeared yet. Once the IRS confirms that the cap has been reached, the automaker will have four quarters for buyers to benefit from a reduced tax credit. Buyers of electric or plug-in hybrid Toyotas will have two quarters to take advantage of a $3,750 tax credit, after which it will halve again to $1,875 for another two quarters before disappearing altogether.

As always, it should be noted that this is not a rebate on the vehicle at the point of sale. This credit will reduce your federal the tax burden for the year by until $7,500. If you don’t pay $7,500 in federal tax each year, you’ll never see the full amount and any “remaining” credit will vanish into thin air. Some additional local and state incentives may apply in your area, but they are separate from the federal tax credit and are not ubiquitous.

Things can change, though, so maybe Toyota’s time in the sun isn’t over yet. In June, Toyota joined Ford, GM and Stellantis in urging Congress to lift the cap on federal tax credits for electric vehicles. The companies called for the sunsetting of the tax credit to be “set at a time when the electric vehicle market is more mature”, as Reuters reported, with the companies citing economic issues and supply chain issues. as contributing to the high costs of electric vehicles.

Until something changes, however, Toyota is expected to join GM and Tesla. Other automakers are thought to be nipping at Toyota’s heels as well. According to Newsweek, Ford and Nissan are closing in on 200,000 qualifying vehicles sold, with BMW trailing them, albeit by a fair margin.

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