What would happen to the electric vehicle segment if the government decides to axe the $7,500 EV Tax Credit? That’s the question on our minds and something Car And Driver tries to answer.
If potential customers were to lose the tax credit of up to $7,000, they may not be as quick to purchase an electric vehicle like the Bolt when there are plenty of fuel efficient gas models out there. A $37,495 manufacturer's suggested retail price can be a deterrent compared to the $29,995 price tag after calculating in the federal tax credit.
There’s already a real world example out there. Georgia was seeing Leaf sales 15 times more than the national average until legislators voted to eliminate the $5000 state tax credit. After that, EV sales dropped to just a fraction of what they used to be. This is bad news for automakers too as they rely on scale and volume to turn a profit in the segment.
If there’s no profit to be made, automakers will reduce the amount of EV models they’ll release by 2021. That’s the earliest year allowed by product-development cycles to dump programs with a reasonable loss. A financial hit is inevitable without the tax credit as the automotive industry has already invested billions into electrified powertrains and battery technology.
We’ll just have to wait and see what happens when Treasury Secretary Steven Mnuchin tried to push Congress to work through comprehensive tax reform by July 29.