Jul 7, 2022 - Economy

EV credits run out for Toyota as automakers plead with Congress for more

Illustration of a car blinker light shaped like a dollar bill sign.

Illustration: Aïda Amer/Axios

Like General Motors and Tesla, Toyota is out of $7,500 electric-vehicle tax credits for its buyers, as the auto industry grows increasingly desperate to get more consumer incentives for EVs.

Why it matters: Automakers, including Toyota, have been pleading with Congress to lift the cap, saying they need help to incentivize Americans to switch over from gasoline cars.

Driving the news: Toyota said its buyers will no longer be eligible for the full credit beginning Oct. 1.

  • Toyota has sold 200,000 qualifying vehicles, the threshold at which the federal incentive begins a gradual "phase out" over the following 12 months.

What they're saying: "Recent economic pressures and supply chain constraints are increasing the cost of manufacturing electrified vehicles which, in turn, puts pressure on the price to consumers," the CEOs of General Motors, Ford, Stellantis and Toyota North America said in a recent letter to congressional leaders, according to Reuters.

  • "For any lasting super-positive impact on demand, credits must be extended," Evercore ISI analyst Chris McNally wrote Thursday in a research note.

Yes, but: Automakers aren't currently able to keep up with demand for EVs.

  • Volkswagen CEO Herbert Diess said Thursday on CNBC that "the outlook is very good" in the long run, but he said supply constraints have led to a year-long wait for VW's EVs.

Our thought bubble: Tax credits do the most good for lower-income buyers, but high prices mean new EVs are currently limited largely to high-income folks, even when incentives are factored in.

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