Toyota Nearing Federal EV Tax Credit Quota

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.

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