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Why are some EVs no longer eligible for tax breaks?

Answer: Because automakers have sold too many of them.

One of the ways that the federal government is trying to encourage residents to buy electric vehicles (EVs) is through tax breaks. EVs are better for the environment than their gas-powered counterparts and, particularly in the face of today’s gas prices, they can be kinder on your wallet. That is, if you can afford the upfront price. That’s where federal tax credits have come in — until now.

Buyers who purchase new EVs are eligible for up to $7,500 in federal tax credits. That is, unless you buy a Tesla. Or a GM. Or certain Toyota models … you get the idea. But why? According to public accounting and consulting firm Yount, Hyde and Barbour, it’s because the federal government put a cap on the number of EVs that can qualify. Once an automaker sells 200,000 electric vehicles, those particular vehicles stop being eligible for the tax breaks. Since Tesla only sells EVs, it’s not surprising that they’ve already reached that cap.

Automakers have been asking Congress to remove this cap to help encourage more EV adoption. After all, if you can’t afford an EV without the help of that tax credit, then why would you buy one? A number of automakers including GM and Toyota laid out this argument in a letter to federal lawmakers, stating that removing the cap would improve buyers’ choices and give autoworkers more stability, in addition to encouraging wider adoption. You can view a list of vehicles that still qualify for the tax credit here.