Blog Page

: Plug-In EV Tax Credit Cap of 200,000 Vehicles Being Met by Tesla and GM During 2018.

Plug-In EV Tax Credit Cap of 200,000 Vehicles Being Met by Tesla and GM During 2018.

15 Jul

During 2008, the Energy Improvement and Extension Act of 2008 was signed into law by President George W. Bush, in response to his 2006 State of the Union speech where he acknowledged that “America is addicted to oil”. President Bush resolved to replace 75 percent of the nation’s Mideast oil imports by 2025. The cost of an unrefined barrel of crude oil exceeded $100 during 2008 as refined gasoline prices at local service station pumps approached $4 per gallon nationally, helping trigger a Great Recession that devastated Nevada and the rest of the country from 2009 to 2014.

The new law established a Qualified Plug-in Electric Vehicle (PEV) Tax Credit that could be applied to the purchase of new vehicles by US consumers that met these requirements:


“A tax credit is available for the purchase of a new qualified PEV that draws propulsion using a traction battery that has at least five kilowatt-hours (kWh) of capacity, uses an external source of energy to recharge the battery, has a gross vehicle weight rating of up to 14,000 pounds, and meets specified emission standards. The minimum credit amount is $2,500, and the credit may be up to $7,500, based on each vehicle’s traction battery capacity and the gross vehicle weight rating. The credit will begin to be phased out for each manufacturer in the second quarter following the calendar quarter in which a minimum of 200,000 qualified PEVs have been sold by that manufacturer for use in the United States. This tax credit applies to vehicles acquired after December 31, 2009. For more information, including qualifying vehicles and sales by manufacturer, see the Internal Revenue Service (IRS) PEV Credit website. Also refer to IRS Form 8936, which is available via the IRS Forms and Publications website.”

(Reference Public Law 112-240, Section 403; and 26 U.S. Code 30D)

Point of Contact
U.S. Internal Revenue Service
Phone: (800) 829-1040

During 2010, GM began manufacturing and selling the Chevrolet Volt plug-in hybrid vehicle (PHEV), whose electric-motor drive train could travel about 36 miles of range from energy stored in a 16-kWh battery pack before a gasoline-powered generator turned on, to continue producing electricity for the battery and electric motor onboard. With two power sources, the Volt could travel a total range exceeding 300 miles.

Nissan manufactured the LEAF battery-powered electric vehicle with a 24-kWh battery pack that gave the electric-motor drive train a range of 80 to 100 miles before it needed to be recharged.

Tesla Motors introduced a two-seat electric Roadster, based on a Lotus Elise sports car chassis, whose electric drive train could travel about 220 miles from a 56-kWh battery pack before recharging.

Under the Obama administration, additional funding of $2.4 billion was invested into growing technologies related to electric cars, as part of the American Recovery and Reinvestment Act of 2009. The Obama administration hoped to achieve sales of one million plug-in electric cars by 2015.

Due to technology and infrastructure issues, the goal was not achieved during that timeline but may become reality by the end of 2018. Currently, the Electric Drive Transportation Association has counted 871,394 new plug-in electric vehicle sales on US roads and highways since 2010:


Recent monthly sales of plug-in hybrid electric vehicles (PHEV) and battery-powered electric vehicles (BEV) by automotive manufacturers have increased during 2018 to more than 20,000 per month, with new 2019 plug-in EV models coming online for the first time during the fall of this year.

In July 2018, Tesla Motors acknowledged that it had reached the 200,000-vehicle cap for the availability of consumer federal tax credits through sales of its Roadster, Model S, Model X, and Model 3 electric cars over the last eight years.

The original $7,500 tax credit will continue to be available to Tesla electric car buyers who take delivery by the end of December 2018. Then during 2019, from January 1 to June 30, the federal tax credit will drop by 50 percent to $3,750 on Tesla vehicle purchases. From July 1 to December 30 in 2019, the credit will be reduced in half again to just $1,875 for Tesla EVs, before it finally expires at the end of 2019.

General Motors may also reach the 200,000 vehicle cap this year due to its increased sales of both the Chevrolet Volt and Chevrolet Bolt EV battery-powered electric car.

Other worldwide automotive manufacturers who entered the plug-in electric car market at a later date, still have room to sell their EV models in the US with the federal tax credit, while still under the 200,000-vehicle cap for the next few years. The

The Inside EV website has published a comparative list of all competing plug-in EV models by manufacturers worldwide:


Under the Trump administration, an extension of the federal tax credit is not certain. Republican leaders considered eliminating the credit during a tax overhaul session in November 2017, but the federal tax credit for plug-in EVs remained intact after tax legislation was passed.

House Bill H.R. 6274, known as the Electric CARS Act of 2018, was introduced by Democratic congressman Peter Welch from Vermont and backed by national electric utilities during June 2018. The bill would seek to lift the 200,000-vehicle cap and extend it for the next ten years. Another section of the Electric CARS Act of 2018 would also allow consumers to receive the credit at the point of sale, rather than waiting until the following year to file through IRS Form 8936. The federal tax credit would instead be awarded to the financial institution that funded the financial purchase of the EV, as is already done through EV leasing agreements by dealerships with consumers:


Compromise bills also being discussed in national legislative committee sessions aim to lift the cap but reduce the amount of the federal tax credit per vehicle.

As battery manufacturing costs continue to drop while DC Fast Charge infrastructure continues to develop worldwide, automotive industry analysts project that the cost of electric cars will be competitive with the cost of gasoline-powered cars during the next decade, even without a federal tax incentive.

China, now the largest automotive marketplace in the world, has offered EV incentives to its population of 1.4 billion people, while encouraging domestic companies to take the lead in developing electric vehicles and technologies that can be sold worldwide as part of the government’s “Made in China” initiatives.

India and Europe are also ramping up electric car development efforts within their regions of the world.

NEVA blog posted by Stan Hanel, Outreach Coordinator

Leave a Reply: