Thanks to federal tax credits, more people can afford electric vehicles due to cuts in the often steep price tags. This has allowed manufacturers to deliver more battery-operated cars running on clean energy.
However, there is a limit to tax credits. Car companies don't get to enjoy these remittances forever, and right now, General Motors' share of credits is getting smaller and smaller.
The Internal Revenue Service posted in March that GM has sold more than 200,000 cars eligible for this tax credit. Beyond that number, the discount of $7,500 will start to decrease.
The rebate is given to models that have the following qualifications:
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Can be recharged from an external source
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Must draw energy from a battery pack with a capacity of 4 kilowatt hours or more
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A gross vehicle weight rating (GVWR) of not more than 14,000 lbs
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Must have four wheels
One of the GM vehicles that has all four qualities is the Chevy Bolt hatchback.
General Motors has since reached the 200,000-unit count, and since April, its federal tax credit got slashed in half to $3,750. Yesterday, the figure has again, been reduced to another 50 percent, which means that those who plan on buying a qualified GM electric car can only avail of a tax credit up to $1,875.
The new, lowered amount of $1,875 will stay available for the next two quarters (through the end of March 2020), after which General Motors plug-ins will no longer get any federal tax credit.
Since 2010, manufacturers of electric vehicles and plug-in hybrids have enjoyed federal tax credits. Tesla, the United States' largest seller of electric vehicles, has already reached its 200,000-unit threshold. GM follows with its tax credits winding down during a phase-out period of 12 months.
As of writing, no other electric vehicle manufacturer comes close to cross 200,000 before the year 2020 ends. This could be a bad thing for General Motors and Tesla - both companies are now at a disadvantage of up to $7,500. Although, there's a way to keep up with the competition, which is to lower costs and go very high volume.
Tesla is doing exactly that in the premium segment. However, GM's Chevrolet brand is in the mainstream segment, making the challenge more difficult.
If you're looking into getting your own GM electric vehicle anytime soon, better do it now than wait for next year. Beyond March 2020, you'll have to pay for the full price.
