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Toyota is No. 3 — Third Automaker to Pass EV Tax Credit Threshold


After selling nearly 4,000 plug-in hybrids and battery-electric vehicles in June, Toyota became the third automaker in the U.S. to cross the threshold to end the eligibility of its plug-in vehicles for the $7,500 EV tax credit.

2023 Toyota bZ4X pair
Toyota’s passed the threshold to lose the $7,500 EV tax credit just as the new bZ4X hits the market.

Tesla and General Motors were the first two companies to march past the 200,000-vehicle limit. Tesla was first, entering the phaseout of its credits starting January 2019. GM wasn’t far behind, beginning in April 2019.

Passing the 200K mark will trigger a tiered reduction of the tax credit for Toyota EV buyers, which comes just as the Japanese automaker begins the rollout of its all-new battery-electric model, the bZ4X, jointly developed with Subaru — and giving Subaru a leg up on selling its version of that vehicle, the Solterra.

Once it’s formally determined by the Internal Revenue Service that Toyota’s crossed the 200,000 mark, according to Bloomberg, Toyota buyers will see the $7,500 credit cut in half, to $3,750 for six months. At the end of that six-month period, it will be halved again to $1,875 for another six months. At the end of the 12 months, there will no more credits.

Just the beginning

Tesla Model 3
Tesla was the first auto company to pass the 200K mark, losing use of the federal EV tax credit.

This is just the beginning as several more automakers will pass the 200,000 total this year, the next expected to be Nissan, which offered the first “mainstream” all-electric vehicle to the U.S. in the form of the Nissan Leaf.

Ford is also on the list, as it’s sold plenty of hybrids like the Escape plug-in hybrid, however, it’s the growing sales of its Mustang Mach-E and F-150 Lightning causing the 200K line to get closer faster. 

Honda, Volvo and more will also be approaching the line with their influx of electrified offerings in recent years. Naturally, automakers have been lobbying the federal government to extend — or in the case of those no longer eligible — or reinstate the federal tax credit.

A move is a foot, but not all agree

2023 Subaru Solterra front red
The Subaru Solterra is basically the twin of the Toyota bZ4X, and now has a big advantage: a $7,500 tax credit.

The election of Joe Biden as President of the United States brought a new focus on the fight for new federal EV tax credits. He made EVs a central component of his Build Back Better plan. However, a splinter group of Democrats looking to add more favorable credits for EVs built in the U.S. by union employees derailed the effort on the first pass.

While many thought that might spell the end, Debbie Dingell (D-Michigan) told discussions about the EV tax credit are continuing in Washington, D.C. 

“There is a lot of discussion going on and lot of negotiation going on, so I would not say it is dead. But I am not going to negotiate in the newspapers,” said Dingell, a confidante of House Speaker Nancy Pelosi, a member of in the Energy and Commerce Committee, and an influential advocate for the auto industry in Congress. The push seems to be focused on offering the same type of credits to all automakers.

Revisions would level the playing field, noted Stephanie Brinley, lead automotive analyst for S&P Global Mobility, who added one approach under discussion could eliminate the cap on tax credits for individual manufacturers and then phase it out completely as the market share of EVs increase. 

“Ultimately EVs are going to have to make it on their own without tax credits,” she said.


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