Cars and Drivers

GM Will Hit Electric Vehicle Incentive Limit in 2018

Paul Ausick

Published: January 2, 2019 2:05 pm

Last Updated: January 31, 2020 2:37 am

When General Motors Co. (NYSE: GM) reports fourth-quarter sales on Thursday, the company is also expected to announce that it has sold more than 200,000 all-electric or plug-in hybrid electrics, thus triggering a 50% reduction in federal tax credits to buyers of the company’s cars.

Tesla Inc. (NASDAQ: TSLA) ran into the same limit in the fourth quarter and incentives on its all-electric cars will also be cut by half. Loss of the $7,500 incentive is a far bigger deal for Tesla than it is for GM. Since the introduction of the Chevy Bolt in late 2016, GM is on track to sell fewer than 45,000 of the all-electric vehicle by the end of this year.

In addition to the Bold, GM also sells the plug-in hybrid Chevy Volt and Cadillac CT6 PHEV, which together will account for about 20,000 sales in 2018. According to sales data compiled by InsideEVs, since 2010 the hybrid Volt had sold more than an estimated 136,000 units through November of 2016. Total sales also include discontinued models like the Chevy Spark and the Cadillac ELR.

As we noted earlier Wednesday, Tesla sold over 245,000 all-electric vehicles in 2018, nearly double combined sales in all the company’s previous years of operation.

GM’s Chevy Bolt will no longer be eligible for the full $7,500 federal tax credit, which drops to $3,750 for the first of this year and then to $1,875 for the second half of the year. By this time next year, the incentive disappears completely, unless Congress reauthorizes it.

All the GM cars were eligible for the $7,500 credit but with annual sales of around 50,000 units, out of more than 3 million vehicles sold, the damage to the company’s revenue is limited.

Will GM make the same offer that Tesla did to offset some of the incentive loss? That seems doubtful, but it would be a way for the company to put some money behind all its recent talk about clean air.

GM stock traded up about 0.9% in the mid-afternoon Wednesday, at $33.74 in a 52-week range of $30.56 to $45.52. The stock’s consensus 12-month price target is $45.09.