The federal tax credit for Tesla vehicles was cut in half on January 1st and General Motors will soon face a similar situation as the automaker has reportedly sold its 200,000th electric vehicle in the United States.
Citing a person familiar with the matter, Reuters says the 200,000th vehicle was sold last month and that means the tax credit will fall to $3,750 in April. The credit will then fall to $1,875 in October before being phased out completely in April 2020.
While the news hasn’t been confirmed by the company, an official announcement could occur tomorrow when the automaker releases its fourth quarter results. Regardless, the drop in incentives could affect sales of the Chevrolet Bolt as the tax credit effectively lowers the base price of the model to $29,995.
The 2019 Bolt starts at $37,495 before incentives and that could make the model a tough sale as a number of completing electric vehicles will still be eligible for the full tax credit. This means General Motors could eventually find themselves in the position where they’re attempting to sell the Bolt for $7,500 more than competing models.
The automaker has been pushing the government to expand the tax credit, but that seems unlikely as President Trump has said his administration is “looking at cutting all GM subsidies, including for electric cars.” This came in response to the automaker’s decision to idle five plants in North America.
A few days later, Trump’s chief economic adviser told reporters the tax credit for electric vehicle will “end in the near future” as the President wants to “end those subsidies and others of the Obama administration.” This would likely prove to be an uphill battle, but Larry Kudlow suggested they could be phased out in 2020 or 2021.