For those on the fence about purchasing a new Chevrolet Bolt EV or Volt, the clock is ticking. Come April 1st, the full $7,500 federal tax credit for electric cars will not apply to General Motors vehicles.
The automaker triggered the phase-out period this January after it sold its 200,000th qualifying car. The credit, part of an Obama administration policy put in place in 2008, is available to every automaker that does business in the United States, but Tesla and GM are the only automakers that have reached the threshold. It will put GM at a serious disadvantage as more automakers begin to roll out their own electric cars, which rivals will be able to market with the $7,500 credit. The credit is not available at the point of sale, rather, buyers receive the credit when he or she files their taxes the following year.
The credit makes the Bolt and Volt much more affordable, dropping the price under $30,000 in both cases.
There will still be some tax credits to be had after April 1st, however. The credit will reduce to $3,750 after April 1st for another six months. In October, it will shrink again to $1,875 before it’s completely gone by April 2020. Yet, the sums aren’t nearly as enticing as the full $7,500 figure.
The federal tax credits for electric cars have continuously stirred up political feelings in Washington, D.C. Republicans and Democrats have called to modify the credit system, while the latest 2020 budget proposal from the Trump administration calls to end the credits altogether to save $2.5 billion in the next 10 years. Democrats have leaned toward making the credits unlimited or extending them for another period of time to renew the benefits for automakers like GM or Tesla. Some Republicans have also called for the end of the program, while others argued to renew them one last time and have them expire uniformly in the next decade.
GM has already joined forces with Tesla and Nissan to lobby for a renewal to the credits, and GM CEO Mary Barra herself has called on Congress to extend them. GM has 20 new electric cars coming by 2023, though it’s unclear how many of them will be sold in the U.S. We know a new Chevrolet electric car is in the pipeline and Cadillac’s first electric car will likely arrive in 2021.