How the Ending of the EV Tax Credit Might Affect EV Vehicle Sales

In 2009, the Federal government created and passed the Plug-In Electric Drive Vehicle Credit. It was passed as a way to provide incentives for consumers in the United States to begin purchasing electric cars. However, while it’s still in effect today, an important caveat is that it’s only available to the first 200,000 buyers of a particular electric vehicle model.

Once that sales figure is reached, consumers are no longer eligible to receive that tax credit from the Federal government. And with electric car sales increasing significantly since then, many of these potential car buyers might find themselves out of luck.

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Buyers of Tesla Vehicles Might Be Affected the Most.

Recently, Tesla Motors’ announcement of their new Model 3 vehicle was met with a considerable amount of demand that far exceeded expectations. While this is great for Tesla, it might not be so great for future consumers who are relying on this federal tax credit. According to many analysts, Tesla is expected to sell their 200,000th Model 3 by 2018, which means that many of those who end up purchasing a Model 3 might not be eligible for the tax credit.

Will Sales Be Affected?

Being that it’s the manufacturer of the most popular EV vehicles, Tesla stands to potentially be affected the most. The United States also happens to be the company’s predominant market, and there are some who are concerned that its Model 3 sales will eventually end up suffering as a result. The tax credit itself is worth $7,500, and with the Model 3 starting at $35,000, that’s no small chunk of change.

Elon Musk, the co-founder and CEO of Tesla Motors, has stated that “Our production ramp plan should enable large numbers of non X/S customers to receive the credit (//” In other words, he has tried to ensure future buyers of the Model 3 that they will still be eligible for the credit.

The uniqueness of the situation is that those who want to purchase a Tesla Model 3 have had to put down a $1,000 deposit, with it not being ready for purchase for a few years in most cases. Some analysts feel that those who are putting down a deposit now won’t care too much about a tax credit in a few years, especially since those who buy Tesla vehicles tend to be well-to-do.

The EV Tax Credit Could Be Extended.

There’s always the chance that the EV tax credit can be extended or a new one can be passed by the Federal government. Many auto manufacturers besides Tesla are devoting a considerable amount of resources towards developing EV vehicles. There’s already some fantastic EV vehicles on the marketplace, including the BMW i3, the Chevy Spark EV, the Volkswagen e-Golf, the Nissan Leaf, and the Kia Soul EV, and the companies behind them want to ensure that they continue to sell well. Factors including the US economy, the price of oil, and the efforts of lobbyists will go a long way in determining the future of EV tax credits.


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