Toyota May Be Running Out Of EV Tax Credits

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Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

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, Automotive Editor - January 7, 2022

Toyota is about to launch the all-electric bZ4X electric SUV in the middle of 2022, but it's going to be in a tricky situation. The Japanese automaker, which has offered hybrids and plug-in hybrids longer than the majority of other brands, is about to hit the 200,000-vehicle cap for the current federal tax credit limit. Once that happens, the available tax credits for Toyota’s electrified vehicles will start to be phased out.

According to Inside EVs, Toyota has sold more than 190,000 plug-in hybrid vehicles. The outlet claims that Toyota is set to cross the 200,000-unit threshold in the first quarter of 2022. At the end of 2021, the total of electrified vehicles that Toyota sold that met the requirements to earn a portion of the federal tax credit stood at 190,047 units. The Toyota Prius Prime (156,668 units) and Toyota RAV4 Prime (30,907 units) accounted for the majority of Toyota’s sales. With Toyota selling roughly 10,000 plug-in hybrids every quarter, it’s going to hit the 200,000 mark shortly.

Once Toyota hits the 200,000 mark, the amount that consumers will be able to receive from the federal tax credit will start to decrease. The full $7,500 credit is available until the end of the quarter when the 200,000-unit mark is hit and for two following quarters. After that, the amount goes down by 50% to $3,750 for the next two quarters, and then down by 25% to $1,875 for another two quarters. After that, the tax credit is not available for Toyota’s electrified vehicles.



This is unfortunate news for consumers and Toyota, as the Japanese automaker is just about to bring the bZ4X to market. For shoppers looking to purchase the new bZ4X, they’ll have to act quickly if they want to get the full portion of the tax credit. With the Toyota bZ4X and Subaru Solterra sharing a lot of the same design qualities, features, and components, we think this will make a lot of shoppers head to a Subaru dealership instead of their local Toyota dealer.

There are only two other automakers that have hit the 200,000-vehicle market — Tesla and General Motors. Both of those brands eclipsed the figure in 2018 and saw the federal tax credit disappear for consumers in 2020. There has been a lot of hoopla about the government coming out with a larger federal tax credit and more incentives for consumers to purchase an EV, but it looks like we’ll be waiting a lot longer for those to arrive.

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Pictured: 2023 Toyota bZ4X (Top), 2023 Subaru Solterra (Middle)

, Automotive Editor

Based out of the Washington, D.C. area, Joel Patel is an automotive journalist that hails from Northern Virginia. His work has been featured on various automotive outlets, including Autoweek, Digital Trends, and Autoblog. When not writing about cars, Joel enjoys trying new foods, wrenching on his car, and watching horror movies. 

Follow On: Twitter

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