Tesla became the first automaker to enter the sunset period for its federal electric-car tax credits, and General Motors is closing in quickly, too. To provide somewhat of a buffer, California is now weighing a $2,000 increase to its electric-car subsidy.
Bloomberg reported on Tuesday that the increase is specifically meant to offset the loss of federal tax credits for some automakers. All automakers qualify for up to $7,500 in tax credits for electric-car buyers. However, once the automaker sells 200,000 qualifying vehicles, the credits enter a phase-out period until they’re reduced to $0. For Tesla, that will be mid-2019. It’s unclear how close GM is, but the automaker has called on the government to raise the limit and extend the credits in the past.
California currently offers an additional $2,500 rebate for electric-car buyers, and the increase would bring the full rebate to $4,500. According to the report, the state plans on funding the additional $2,000 per electric vehicle with monies from the Low Carbon Fuel Standard. Companies in the state must purchase credits to comply with the regulation. The extra incentive could also be applied at the time of sale, rather than a mail-in rebate like the program operates now.
Right now, the $2,500 state incentive comes from another state-run program: the cap-and-trade program for reducing carbon-dioxide emissions. Companies must also purchase credits to comply with this regulation as well.
As for the federal tax credits, legislation has been introduced in the House of Representatives to lift the 200,000-unit cap. The pending bill would also apply the up-to-$7,500 credit at the point of sale and not provide the funds at tax time.
Should nothing change, and it’s quite likely that will be the case, GM will face marketing its first mainstream electric car, the Chevrolet Bolt EV, with a full MSRP of $37,495. With the credits, the car costs under $30,000.