Toyota has reached the 200,000-unit cap on electric and plug-in-hybrid vehicles that are eligible for a federal tax credit of $7,500. While the Japanese automaker does have exactly one electric vehicle in its lineup that is eligible for credit, Toyota has mainly used up its tax credit on plug-in hybrids.
Most of the credits were used on Toyota's Prius Prime and RAV4 Prime plug-in hybrids. Lexus, Toyota's luxury brand, also has the NX crossover plug-in hybrid. The bZ4X, the automaker's new all-electric SUV, hasn't even really had a chance to hit the streets before the tax credits ran out. The first orders were just starting to be delivered, but a couple of weeks ago, Toyota began recalls on the bZ4Xs due to a problem of wheels falling off. The company has sold 232 of the EVs this year so far, according to Toyota's half-year sales report.
Toyota is also planning on upping its EV game in the coming years, with 30 EVs on the books for 2030, with 15 fully electric models to be released by 2025. The company is working on building a North Carolina battery plant to support its EV production, and just partnered with Redwood Materials, a lithium-ion battery recycling startup, to collect and recycle batteries and battery materials for future EVs.
Toyota isn't the first automaker to cap out -- Tesla and General Motors have also reached their 200,000-unit cap. GM, Toyota, Ford and Stellantis are among some EV automakers that are lobbying Congress to extend the incentives before the next elections in November, when Republicans could potentially take over both houses of Congress. Historically, the right wing has been opposed to EV subsidies, which auto experts and lawyers say will make it difficult to reach the Biden administration's goal of 50% EV sales by 2030.
People who have a current Toyota order will still get the full credit as long as they have it delivered before the end of this quarter, which ends on September 30. The IRS will need to confirm that Toyota's subsidies have run out, and once the agency does, Toyota will have four quarters left to offer buyers an electrified vehicle for a reduced tax credit. During the first two quarters, buyers will be eligible for a $3,750 tax credit, and in the final two quarters, they'll get a $1,875 credit.
As a reminder, the federal tax credit is not a discount for an EV. It is a rebate that benefits tax payers at the end of the financial year. So if you owe $10,000 in federal tax, congratulations, with the $7,500 rebate, you now owe $2,500. However, if you only owe $5,000, you now owe nothing, and that remaining $2,500 just disappears.