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Toyota passes EV tax credit milestone

Picture of Chris Teague

Chris Teague


Toyota’s PHEV sales have grown in recent years, to the point that the auto giant recently passed a major milestone in the race to sell as many electric vehicles as possible. The automaker recently surpassed 200,000 plug-in hybrid sales here in the U.S., beginning the phasing-out process of federal EV tax credits for the brand. The $7,500 tax credit only stands until an automaker reaches the 200,000 mark, at which point it decreases slowly until it’s phased out completely.


Toyota was slow to join the electric game, but its hybrid and plug-in hybrid vehicles have been on sale for years. The full tax credit will be cut in half to $3,750 on October 1 of this year and will decrease again to $1,875 on April 1, 2023. The credits are a controversial issue in politics and in the industry in general, as some believe they obscure true demand for electric vehicles.

Tesla and GM already crossed the event horizon. As an all-electric automaker, all of the company’s vehicles count against the 200,000-unit threshold. General Motors has the Chevy Bolt to thank for its credits’ demise.


For Toyota, the milestone couldn’t have come at a worse time. The automaker’s new bZ4X electric crossover just went on sale, and it has plans to roll out several more new EVs in the coming years. Buyers of those vehicles will suffer the lack of tax credits, which expired due to sales of PHEVS.

At this point, it’s unclear if the government will reinstate tax credits or extend the number of units allowed for the full amount. Until then, don’t count on a big tax refund if you’re shopping for a new Toyota EV or PHEV.

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