Recently, Congress failed to include legislation in a spending bill that would have tripled the 200,000 cap on the number of EVs per manufacturer that qualify for tax credits. The legislation would have allowed GM, Tesla and any other automaker hitting that ceiling to offer a slightly lower tax credit of $7,000 for another 400,000 plug-in cars.
Now GM and Tesla, which pioneered the development of electric cars while other automakers sat on the sidelines, will enter 2020 at a disadvantage. Competitors such as Ford Motor Co., which has the battery-powered Mustang Mach-E SUV coming in late 2020, will effectively have a $7,500 discount over comparable GM and Tesla vehicles.
"Seventy-five-hundred bucks less than your competitors is a good thing," said Brett Smith, director of propulsion technologies and energy infrastructure for the Center for Automotive Research. "It's a little bit unfair in that both of these companies went out and really developed and pushed this technology, and now they are not going to have any federal discounts to offer."
GM and Tesla might have to cut prices to make up the difference — but Tesla could be more insulated because of the high demand for its cars.
"For GM, I think it's a bigger deal than it is for Tesla," Smith said. "The Volt is a very nice electric car, but it's not really an aspirational car. It can be cross-shopped a little bit more than Tesla vehicles."
GM and Tesla both hit the lifetime ceiling of 200,000 electric vehicles per manufacturer that qualify for the tax break in 2018, triggering a phase-out process that saw the number of tax credits they could offer falling by half every six months until they hit zero on Jan. 1, 2020.
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