Currently electric car buyers are eligible for a $7,500 federal tax credit, but the guidelines of the tax credit stipulate that once an automaker sells over 200,000 electrified vehicles, the tax credit begins to phase out. This doesn’t really matter for smaller players, but for Tesla and Chevy this could turn off some EV buyers, since they will soon no longer be able to get the large rebate.
To counteract the phase out of the federal tax credit, California is now looking at raising its own EV incentives to improve electric car sales in the state. Currently buyers are eligible for up to a $2,500 rebate from the state of California, but if the new proposal passes, California could raise the rebate up to $4,500.
It’s not known if congress will raise the 200,000 vehicle cap so that more EV buyers can get the credit. But given the fact that President Trump has proposed freezing federal fuel economy requirements, it seems unlikely that the federal government will approve a change that could raise electric car sales.
Mary Nichols, chair of the state’s Air Resources Board stated to Automotive News, that if congress does not approve a lift on the 200,000 limit, “we would be having to look at another way to make up for that.”
California will hold a hearing this week to discuss increasing the electric car subsidy an additional $2,000.