Cooley On Cars
Why the end of EV incentives is loomingYou know when you buy an electric or plug-in car, there's a nice fat federal and probably state tax incentive awaiting you. But the end is near, Brian Cooley explains.
When you buy a car with a plug, you get more than just that. There's a federal tax credit on the other end of that cord. Up to $7500 coming your way, they calculate it depending on the size of the car's battery Starting with a base amount. That credit is then subtracted from any tax you owe on your next federal return. It can only reduce your payment to zero. It can't create a refund. And your state may have a similar credit. Here in California, it's up to $2,500. And there's likely an HOV lane sticker waiting for you where you live. But these credits won't be around forever. The federal credit phases out after a given carmaker sells its 200,000th plugin car. And the second calendar quarter after that, the credit is cut in half. For the next two quarters after that, it's cut down to 25% and after that it's gone. And by the way, they count General Motors as a car maker for example, not just Chevrolet. So the cap approaches faster. GM has so far sold a little over 100,000 Volts, about 8,000 Sparks, Park EVs, a few thousand Cadillac ELRs. And all in, about 125,000 plug in cars and that's before the arrival of the red hot Bolt electric which GM says it can make up to 90,000 of each year. Air. Tesla has sold about 190,000 cars in its history, though not all of those in the US. But they say they'll be making 5000 cars a week by the end of 2017 when the red hot model three arrives. With it's more than 300,000 preorders. As you can see, these two are getting close to the day when they'll have to sell electrics with less or no tax payer money helping out. At the state level, it's rocky as well. The 25 states that used to offer some kind of credit are now down to just 16 according to the New York Times. Georgia offers a credit for full electrics only. No plug in Hybrids. Colorado has a bill in progress that would kill their $5000 EV credit. Illinois let it's up to 4,000 dollar state credit expire as did Utah on 2016. Bottom line public subsidies for plug in cars were never meant to be permanent but as of 2017 that's starting to look much. Sharper and less theoretical. More car tech demystified right now at cnetoncars.com click on Car Tech 101. [SOUND] [MUSIC]