Tesla and General Motors lead the pack when it comes to the sales of plug-in vehicles. Data from Automotive News says Tesla stands at 193,344 vehicles, followed by GM at 181,062, But there arises a problem; once they cross the 200,000 mark, the phaseout of the $7,500 tax credit begins. Tesla is expected to be first with some predicting it taking place next month (provided they don't run into more production troubles). GM will follow sometime next year.
Barring some sort of extension of the program, it will put the two automakers in a bit of bind where they'll be playing on an uneven playing field due to increased costs. It should be noted that the tax credit won't disappear. The way the phaseout works is that the $7,500 credit sticks around for two more quarters after the 200,000 mark is reached. After that, the credit is cut to $3,750 for the next two quarters, then it drops to $1,875 for two more quarters before it is gone.
"The groundbreakers, the people who forged ahead and got these products out there first, could be at a significant disadvantage now. I don't think it's fair to reward a company that hasn't been as innovative with an incentive that begins when someone else's ends," said Rebecca Lindland, executive analyst at Kelly Blue Book.
Industry experts expect GM to take a bigger hit than Tesla due to the credit affecting decisions on "lower-priced vehicles such as the sub-$40,000 Chevrolet Volt more than a $75,000-plus Tesla Model S or X" according to research done by the Institute of Transportation Studies at the University of California-Davis.
A study in 2016 bears this out. 40 percent of Chevrolet Volt buyers admit they wouldn't have purchased one without the tax credit. Only 14 percent of Tesla buyers say the same.
This likely explains why various GM executives have been pushing the White House for a possible extension of the credit.
"At the end of the day, we think having the benefits is great for the customer, because obviously it makes the EV adoption easier and more attractive," GM North America President Alan Batey told Automotive News.
Source: Automotive News (Subscription Required)