The $7,500 federal tax credit is a big inducement for consumers to buy electric vehicles and for automakers to develop electric vehicles. Once an automaker sells and delivers more than 200,000 electric vehicles (including plug-in hybrids with more than a 16 kWh battery pack) total, then the credit gets cut in half by the next fiscal quarter of sales.
Let’s say Tesla delivers its 200,000th unit in Q4 this year. Consumers would still get the full credit for vehicles delivered in 2019 Q1, but then for deliveries made in 2019 Q2 and Q3, the credit gets cut in half. Then it gets cut in half again for the next two quarters. So if production goes as planned, which is a phrase never uttered once about Tesla in its 15-year history, the federal tax credit for buying a Tesla will be nil by mid-2020.
Tesla won’t release how many vehicles it has sold overall, but General Motors may be closer to the 200,000 mark due to the Cadillac ELR, Cadillac CT6, the Bolt EV and the Chevy Volt, which went on sale in late 2010 along with the Nissan Leaf. CNN estimated GM had sold more than 160,000 electric vehicles as of late February.
“We’re not sharing a specific number,” said Elizabeth Winter, GM spokesperson. “We expect to reach the threshold before the end of the year.”
The Model 3 is the best-selling EV so far in 2018, according to insideevs.com. As you may have heard, Tesla is ramping up production from a planned 2,500 week now (which it is falling short of by about 100 to 200 units) to 5,000 Model 3s per week by the end of 2018 Q2. Everyone except Elon Musk expects it won’t reach that goal, but consumers may be tired of waiting.
As of August 2017, which was the last time Tesla reported the number of Model 3 cancellations, about 63,000 people had canceled their order. If Congress doesn’t change the law, it is reasonable to expect more cancellations before the expected 2019 deliveries. Following Tesla and GM’s lead, every major automaker has a plug-in hybrid on the market, with imminent plans for fully electric vehicles. So there will be plenty of options for an EV for the masses with the full credit by 2019.