Will Electric Car Sales Fall When U.S. Federal Tax Credits End? The Answer is a Complex One…

For some time now, those wanting to get behind the wheel of a brand-new electric car in the United States have been offered a generous incentive for doing so: up to seven-thousand, five hundred dollars in Federal Income Tax credits that can be used against your year-end tax bill, effectively slashing the car’s sticker price by a decent amount. That is of course, if your tax liability is more than seven thousand five hundred dollars at the end of the year.

Available since the start of twenty ten, the Federal Tax Credit for electric vehicles often pairs up with individual state incentive programs, not only making electric vehicle ownership something of a no-brainer for those in electric car friendly states, but also makes entry-level electric cars not much more expensive than a similarly-specced internal combustion engine car.

Yet these tax credits will soon be going away, not as part of a change in policy in the White house but under the terms the incentive program was initially established with. Which means, says some sources, that electric car sales will fall off the metaphorical cliff as a consequence…

Watch the Video above and leave your thoughts in the Comments below.

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  • Erocker

    To get the full $7,500 current rebate you will need about a $100,000 annual income. This makes it a very strange rebate, cutting out lower income people from participating in electric car advancement.

    • Pinewold

      How did you calculate the need for $100k?

      If you have an income of $55,000 and a standard deduction of $6,300 you will owe $7946 in taxes?

      • Erocker

        You must be single with no home interest deduction. Most people that buy electric cars have a house to charge it at and are married with a second car to do the job the current electric cars can’t do, that is whom I was addressing.

  • Martin Lacey

    Good points Nikki.

    Edmunds missed a very critical issue in their article…. the cost of gas. In 2012, it reached an all time high (around $3.60/G (USA) and starting tailing of to around $2.40 when the Georgia tax credit ceased. It was a combination of those two points which decimated Leaf sales.

    Today’s EV market is growing year on year against the backdrop of cheap gas Going forward gas taxes will rise as will legislation to make gas vehicles cleaner and more efficient. Battery pack prices are falling faster than analyst had forecast and some automakers (well one really) will reach the price parity convergence point by 2019. Foreign sales may keep them busy until that point if US sales fall away, but somehow I think that’s unlikely.

    To wit, Edmund’s are once again wrong! Strange how they are not running a dooms day article on ICE just yet 🙂

  • Christopher Herzig

    I think this is not going to prevent one person from buying a Tesla, however if your are GM the ending of this thing is bad news because unexciting crap is going to sit on the lot.