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Tax Credit Limit Looms Over Electric Vehicle Market (Podcast)

July 1, 2022, 8:46 AMUpdated: July 1, 2022, 6:13 PM

The electric vehicle market in the United States is reaching an inflection point as companies look to boost manufacturing at the same time another large automaker is on the verge of losing a critical consumer incentive.

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The $7,500 electric vehicle tax credit begins phasing out at 200,000 vehicles sold per manufacturer, a threshold General Motors Co. and Tesla Inc. hit years ago. Toyota Motor Corp. announced Friday that it has hit the sales milestone, a mark that Ford Motor Co. also is fast approaching.

Democrats remain interested in ways to expand the EV credit, but that effort is wrapped up in the Biden administration’s stalled tax, climate, and social spending plan.

Ellen Hughes-Cromwick, a senior resident fellow for climate and energy at the think tank Third Way, is the guest on the latest episode of Talking Tax, which was taped before Toyota’s announcement. Hughes-Cromwick—who previously worked at the Commerce Department and Ford—discusses growth in the electric vehicle sector, breaks down the argument for expanding the federal tax credit, and explains what it will take to create a market for used EVs.

Do you have feedback on this episode of Talking Tax? Give us a call and leave a voicemail at 703-341-3690.

(Updates throughout with Toyota news.)

To contact the reporter on this story: Kaustuv Basu in Washington at kbasu@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at PAmbrosio@bloombergindustry.com; Alex Clearfield at aclearfield@bloombergindustry.com