By on January 7, 2022

Toyota Motor Corp. looks to be the next automaker that will have exhausted its allotment of EV tax credits for the U.S. market.

While the quota for $7,500 rebates has already been reached by Tesla and General Motors, Toyota is closing in with 190,000 plug-in sales of its own. The government has limited federally backed incentives to just 200,000 vehicles per manufacturer. Once the Japanese manufacturer reaches that limit, credits go into a cool-down period where it can continue benefiting from the full sum six months after the relevant quarter ends. From there, incentives will be halved for the next two quarters until the company is no longer eligible.

There is a chance that federal EV incentives could be reset as part of the Build Back Better Act. However the bill is currently deadlocked in Congress after falling under criticisms that it’s too broad and expensive. Automakers have also found themselves divided on it due to provisions that would give union backed automakers more financial support. This included Toyota, which launched an ad campaign opposing the Biden administrations proposed EV tax credit scheme back in November.

Tesla has also opposed the United States revisiting EV tax credits, suggesting instead that automakers stick with the existing 200,000 vehicle limit. CEO Elon Musk has likewise stated that he opposes any government providing continued financial aid to electric cars — adding that EVs would need to stand on their own to be taken seriously and ensure a healthy market. Criticisms were also leveled at the proposed scheme for not having adequate sunset provisions that could result in the government funding electric vehicle production indefinitely. But Toyota’s grievance seems to hinge entirely on the fact that the White House wanted to favor unionized automakers by offering an additional $4,500 credit it wouldn’t be eligible for.

“What does this say to the American autoworker who has decided not to join a union? It says that their work is worth $4,500 less because they made that choice,” asked one of the ads. “What does this say to the American consumer? It says that if they want to buy an electric vehicle not made by Ford, General Motors or Chrysler, they will have to pay an extra $4,500 — which is about $100 more per month over a four-year period.”

InsideEVs presumed that Toyota Motor North America will have easily surpassed the 200,000 plug-in sales by Q1 of 2022 after verifying it sells more than 10,000 electrified vehicles sporting large enough (16 kWh or bigger) batteries every quarter. That’s bad news for anyone hoping to purchase the upcoming bZ4X BEV, as it will only be eligible for the full $7,500 tax rebate for a couple of months.

Unless Build Back Better passes, Ford is likely to be the next manufacturer to have exhausted the Obama-era tax credit limitations. Estimates have Blue Oval tapping out in the fall or summer of 2022.

[Image: NeydtStock/Shutterstock]

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21 Comments on “Toyota Nearing Federal EV Tax Credit Quota...”

  • avatar
    SCE to AUX

    This is exactly how the rule was intended to work. Resetting the clock won’t actually help the laggards catch up; they still have the existing provision to utilize while the leaders don’t.

    Toyota’s problem is that it exhausted its credits on non-BEVs. This was also the law’s intent (to help the environment), but with BEVs taking over the market, Toyota’s first BEVs will have a price disadvantage. That was their choice.

    • 0 avatar
      SCE to AUX

      By the way, if you design/price a car such that it’s only sellable with incentives, it will ultimately fail.

      Welfare was intended to help people get back on their feet, but for many it became a way of life, and the government let it happen. Similarly, EV incentives should be short-lived per the current plan.

      • 0 avatar
        Matt Posky

        Agreed. Everyone knows I’m kind of sour on EVs in general and this is a big reason why. It’s not so much the cars themselves (there are even a few models that I think would work for me if wasn’t so prone to cross country road trips) but the way the industry is handling them.

        Expecting governments to funnel taxpayer money into EV production indefinitely is ridiculous. Making EVs non-serviceable to independent shops and owners under the false premise of “safety and security” is ridiculous. Using EVs as a launchpad for unnecessary subscription fees or advanced data harvesting and then marking it as chic and stylish is ridiculous. Automakers following the throw-away, mobile phone business model for EVs and claiming its somehow going to be better for the environment is ridiculous.

        I just want a competitive market where the average consumer isn’t getting screwed at every opportunity. But we’re careening in the other direction while the industry dresses it up in a faux green disguise.

    • 0 avatar

      I’m with Elon on this one. The biggest barrier to the increased adoption of EVs is the initial purchase price, and handing out a subsidy isn’t going to help close the gap between combustion engine vehicles and EVs.

    • 0 avatar
      Peter Gazis

      The tax credits were meant to jump start the U.S. electric car industry. It was thought that a large number of new electric vehicle start ups would replace the traditional automakers.
      Ended up with U.S. tax payers giving money to Toyota to build cars in PHEVs Japan

  • avatar

    Let it lapse. The goal was to give an alternative technology a period of time to mature so that the cost of manufacturing would fall. It wasn’t supposed to be permanent. This process is nothing new. Imagine the obstacles to overcome if combustible fuel was the “new” source of energy. The cost of building the pipelines, wells, refineries, distribution stations, etc. would be staggering. I see no problem with the government priming the pump if you will – there is plenty of good reason to do so – but at some point a technology will have to be able to stand on its own, or not.

  • avatar

    We subsidize fossil fuels in the billions. spare me the crocodile tears

    • 0 avatar

      @JD-Shifty: I don’t disagree with funding the move away from fossil. I just think that money should be focused more on basic research and infrastructure. EVs seem to have won over the public judging by the waiting lists for them even without the subsidies, so I’d like to see places like the national laboratories get funding and more funding to pay the education of material science and chemical engineers.

      • 0 avatar
        Matt Posky

        We don’t need to be pouring trillions onto the fossil fuel industry either.

        • 0 avatar

          Gasoline/Diesl is taxed at the highest rate of any energy source in the United States.

          Electricity is taxed at lowest proportional rate.

          Source is OECD

          Interested to know of direct subsidies to fossil fuel industry you would reform.

          There is one that I would eliminate. Percentage Depletion (26 U.S. Code § 613. Active)

          In contrast, there is need for Federal tax on EV energy use to pay for transportation infrastructure.

    • 0 avatar
      Art Vandelay


  • avatar
    Jeff S

    Why should we subsidize fuels and EVs except for the fossil fuel lobbyists. The solution to the problem is not to subsidize political campaigns with outside interests. The lobbyists write the legislation that favors their interests.

  • avatar

    Nothing more permanent than a temporary government program.

    I wouldn’t hold my breath waiting for the credits to actually expire, but hope I’m wrong.

  • avatar

    Vehicle purchases ultimately are economic decisions, made by individual consumers based on their real-world cost/benefit analysis. Environmental virtue-signaling is not high on the list for most buyers. BEVs needed a subsidy because current battery technology is not cost-effective compared to ICE. IMO hybrids should have been subsidized more to buy time to allow battery manufacturing to ramp up, and prices to fall.

  • avatar

    But at least we didn’t send $1400 to the bostom bomber in the stimulus. Oh wait.

    Anywho, can I hijack the thread to ask a question please? Is there going to be a 2022 Mazda MX-5 Miata produced and sold? Local dealer just told me Mazda is not taking orders and is making an all new model. First i’ve heard of that.

  • avatar

    Is the credit limited to 200,000 vehicles or does it continue to be available for 6 months past the reaching of 200,000?

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