EVs From Tesla and GM May Start Losing Their Tax Credits

Electric vehicles have caught the eye of many American consumers. But it’s not only the cars’ green cred that seals the deal. Another big lure: a federal tax credit of up to $7,500 per vehicle. Now that lucrative incentive may be fading away for two reasons. First, buyers of vehicles from leading EV makers such as Tesla Inc. and General Motors Co. could soon use up the maximum value of tax credits for their brands. (They’re capped for each manufacturer.) But worse for the entire industry, all EV credit provisions in the U.S. tax code are at risk of being eliminated as part of the horse trading under way over a tax cut bill.

To understand what could happen to electric car sales if Republicans phase out federal EV incentives, look at what happened in Georgia. Electric car sales there were growing briskly until the state cut its $5,000 electric vehicle tax credit in June 2015. Sales crashed from as many as 1,400 electric cars a month statewide to fewer than 100 the month after the incentive was axed.