GM electric vehicle tax credit phase-out to begin this year: Report
U.S. automaker General Motors will soon lose the ability to offer customers a discount on its electric vehicles, as Tesla cuts prices on all of its models to combat the same issue.
GM hit a designated sales threshold – a cumulative 200,000 vehicles – which triggers a phase-out of the $7,500 federal tax credit for electric vehicles, Reuters reported on Wednesday, citing a person briefed on the matter. The automaker is said to have hit the sales figure in the fourth quarter, which suggests the credit will be halved – to $3,750 – around April. Following that timeline, the credit would fall further to $1,875 in October before being completely eliminated in April 2020.
After GM announced plans to shutter U.S. factories, the Trump administration threatened to cut subsidies to the U.S. automaker – including those for electric vehicles.
GM did not immediately return FOX Business’ request for comment.
It was widely expected the automaker would hit 200,000 in sales by early 2019.
In a bid to boost profits, GM has narrowed its vehicle offerings, including a focus on its portfolio of electric models. It is scheduled to release two new electric cars in 2019, adding to a total of 20 by 2023.
Meanwhile, shares of Tesla plunged on Wednesday after the electric automaker announced it was slashing the price of its vehicles by $2,000 to combat the phasing out of the same federal tax credit. On Jan. 1, customers looking to purchase a Tesla were only eligible to receive $3,750 in tax credits after Tesla reached the 200,000 sales milestone last year. The credit will be entirely phased out by 2020.