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By Roy Nakano

Wed, Feb 24, 2021 10:58 AM PST

Yes! …if the GREEN Act gets its act together

Will 2021 bring the federal tax credit for plug-in electric vehicles back to General Motors and Tesla? That’s the multi-million-dollar question that hangs in the balance for both car companies.

For GM, the stakes are high. In late January, it announced all of its light duty vehicles will be all-electric by 2035 and the company carbon neutral by 2040. To get there, GM is investing 27 billion dollars into electric propulsion.

Unfortunately, its electric efforts to date haven’t been electrifying the sales charts. GM’s plug-in electrified Volt, along with its all-electric Bolt, sold well enough for the company to reach the federal income tax credit quota of 200,000 vehicles. But Bolt sales have stalled since the tax credit disappeared for GM, and Volt sales have been discontinued all together.

GM generates a new Bolt EV and Bolt EUV

The 2022 Bolt EV and EUV share similar-looking interiors as well as exteriors. The interior shot above is from the Bolt EUV.

GM just introduced a new Bolt EV as well as an all-new, larger Bolt EUV for model year 2022. The new Bolt EV at long last comes with a new set of seats to replace the much-criticized ones fitted to the first-generation model. The range remains the same at 257 miles, but its range was already at the top of its price point. As to price, it’s been reduced by a whopping $5,500 on the 2022 Bolt EV—to $31,995. In addition, Chevy will now pay for the installation of a 240-volt charger for the home. Together, that’s almost the amount of the old federal tax credit. Also for 2022, the Bolt EV gets standard DC fast charging, wireless Apple CarPlay, wireless Android Auto, and a new look—a look that it shares with the larger Bolt EUV.

The larger, more crossover SUV-like EUV, which goes for $33,995, is still significantly less than the outgoing Bolt EV, and includes all new features in the new EV. The EUV can also be fitted with GM’s Super Cruise, widely regarded to be the best of the hands-free driver-assist systems available at the moment.

The jury is still deliberating as to how much of an improvement it is over the old look (there’s no hiding the fact the somewhat dorky profile of the original remains). And for that reason, and because GM is betting the farm on electric propulsion, it could sure use the federal tax credit again.

Tesla and the federal tax credit

Tesla has been faring better than GM since it used up its quota for the federal tax credit. 2020 saw Tesla sell almost 500,000 vehicles—a phenomenal record for electric car sales. Tesla has been topping Consumer Reports’ list of the most liked car brands, with its least expensive offering, the Model 3, topping the list as the most satisfying car on the market. But sales of its best-selling Model 3 took a downward turn during the year. By August of 2020, Tesla’s new Model Y crossover SUV surpassed sales of the Model 3.

Perhaps in response to the lower price of the new Bolt EV, Tesla just dropped the price of its Model 3 Standard Range Plus to $36,990. To counter the competition from the Bolt EUV as well as from Volkswagen’s ID4 and Ford’s Mustang Mach E (both of which still retain the full federal tax credit), Tesla dropped the price of its long range, dual motor Model Y crossover SUV to $48,990. It’s still a bit higher than the Ford and VW offerings. Even Tesla could use the return of the federal tax credit that it has since lost.

A return of the federal tax credit could help boost sales of the Model 3 (Tesla press photograph by Timothy Artman)

Enter the GREEN Act of 2021

It’s been tried before, but the Growing Renewable Energy and Efficiency Now (GREEN) Act of 2021, recently introduced by House Ways and Means Committee Democrats, has one factor in its favor: Democrats now hold a one-vote majority in the U.S. Senate. With Joseph Biden in the White House and Democrats controlling the House of Representatives, the Vegas odds are this GREEN Act will see the light of day.

Among other things, the new GREEN Act extends the federal tax credit for electrified plug-in vehicles from 200,000 to 600,000 units per manufacturer. After the initial 200,000 sales ceiling is reached, the tax credit is reduced by $500. This means both GM and Tesla will regain their federal tax credit, albeit to a maximum of $7,000 per vehicle.  

Will the GREEN Act get its act together?

The Senate is expected to introduce its own version of the GREEN Act, which will likely mirror the House version in most ways. There are aspects of the House version that may not make the final cut, but there seems to be relatively broad support for the view that the current limit of 200,000 unduly penalizes GM and Tesla for being the first ones out the gate to sell electric cars.

So, the money is on vehicles like the moderately priced Bolt EV, Bolt EUV and Tesla Model 3 Standard Range Plus to regain their federal tax credit. Whether the entire GM and Tesla lines of electric cars get the tax credit will depend on how much push back there will be to extending the credit to the range of cars beyond the reach of the average consumer. Accordingly, don’t be too surprised if the $132,990 Tesla Model S Plaid+ doesn’t qualify for the tax credit. In addition, you’ll have to wait until the GREEN Act is actually enacted before it applies to GM and Tesla vehicles you purchase. As the language in the Act states, it only applies to qualified plug-ins sold “after the date of the enactment of the GREEN Act of 2021”.

The Ford Mustang Mach-E qualifies for the full $7,500 federal tax credit (Roy Nakano photo)

What qualifies for the federal tax credit right now?

Of course, if you’re not dead set on getting a GM or Tesla product, there are a number of electrified plug-in vehicles that qualify for the existing $7,500 federal tax credit right now. Here’s the list as of this writing—and this list includes models that have been discontinued but will still qualify if new: 

Audi e-tron Sportback

Audi e-tron SUV

BMW i3 Sedan

BMW i3s

Fiat 500e

Ford Focus EV

Ford Mustang Mach-E

Hyundai Ioniq Electric

Hyundai Kona Electric

Jaguar I-Pace

Kia Niro EV

Kia Soul Electric

Mercedes-Benz B-Class EV

MINI Cooper SE Hardtop (2020-2021)

Mitsubishi i-MiEV

Nissan LEAF

Porsche Taycan 4S

Porsche Taycan Turbo EV

Smart fortwo Coupe

Smart fortwo Cabrio

Volkswagen e-Golf

Volkswagen ID.4 EV

Volvo XC40 Recharge Pure Electric

If you want to receive updates on the GREEN Act, go to congress.gov and click Get Alerts.

Featured photo: Chevrolet’s new $33,995 Bolt EUV and $31,995 Bolt EV for 2022. Chevy includes the cost of installing a 240-volt charger in your home.

About The Author

Roy Nakano's profile picture

Roy Nakano

Roy Nakano gave birth to LACar in the late '90s, having previously delivered LA Audio File back in the '80s. Aside from the occasional review, Roy likes to stray off the beaten automotive path: "Six Degrees of Reparations" reflected on the regretful ethical paths taken by car companies throughout history. "Traveling Through the Past and Present of the Green Book" looked at businesses that took a stand against racism and the man that wrote the book on where to find them. "Best Cars to Drive in Rush Hour Traffic" was an LACar guide published in the pre-GPS era. "In Search of the First Datsun 510 Tuner" looked at one of the milestones in the origin of import tuners.

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