Toyota just started its own BEV program, but it squandered all its tax credits on hybrids

Toyota has sold its 200,000th additional vehicle in the United States, which means its access to the $7,500 federal tax credit will expire over the next 15 months.

The company has joined forces with Tesla and General Motors and is no longer eligible for credits, with Ford and Nissan also expecting to reach their cap later this year.

The credits are designed to expire gradually, so existing Toyota order holders will still get the full credit as long as they get delivery before the end of the quarter.

Since Toyota sold its 200,000th additional vehicle last quarter, that means full credits will run through the end of this quarter (September 30). After that, there will be a reduced credit half of $3,750 available for the next two quarters, and $1,875 for the next two quarters. These credits have no unit limit, so Toyota can use them for as many plug-ins as they can sell in that time period.

This moment may come as a surprise to many (although Toyota warned us about it in April), because Toyota hasn’t actually sold any BEVs yet. It had a short-lived RAV4 EV program in the early 2010s, with the electric powertrain supplied by Tesla, but that only accounted for about 2,500 units. Most recently, I finally shipped my first BEV, the Toyota bZ4X, but only a few thousand have been sold so far (and they’re currently being recalled to prevent wheels from falling off).

But Toyota has been selling plug-in, low-range hybrids all along, with the original 5.2kWh Plug-In Prius and 8.8kWh Prius Prime (which we at Electrek weren’t a fan of). The US federal tax credit applies to electric-connected vehicles with a storage capacity of more than 5 kWh, with an advantage of $500/kWh until the $7,500 limit is reached.

So low-range cars like the Plug-In Prius with its battery barely above the threshold are only eligible for the minimum possible credit of $2,500, while the Prime gets $4,500. The latest RAV4 Prime PHEV has an 18kWh battery, enough for a full $7,500 credit.

Because of all these additional hybrid sales, Toyota has largely depleted its 200,000-credit allocation on low-range hybrids, leaving a significant portion of the credit value on the table.

Now I’m finally starting to sell BEVs with the bZ4X, but it’s a slow start. Toyota expects to sell only about 7,000 units this year, which means only 2,000 BEV customers will benefit from the full tax credit starting until sunset three months from now. This is assuming it can handle existing recall issues quickly.

Take Electric

We’ve written a lot about Toyota’s deficient (or hostile) electric vehicle strategy, and this is another sign of that. Instead of making convincing electric cars, I looked at regulations and built a PHEV with “minimal flair.” Toyota cynically discounted the Prius’ battery size just above the minimum amount to qualify for EV credits and carpool stickers while others in the industry have already taken steps to make better electric cars.

As a result, Toyota has lost several hundred million dollars in credit to its customers, and worse, the new EV now looks less interesting compared to other electric vehicles in its class such as the ID.4, EV6 and Ioniq 5. These are not only better cars (given Because manufacturers worked around some kinks with the previous generation of electric vehicles) but also cheaper when credits are taken into account.

A recurring downside to electric vehicle credit design is its ability to give back to market arrears. Companies that take electric vehicles seriously and hit the market early, then run out of credit, end up at a disadvantage versus other electric vehicles in their class that come later and can still take advantage of the credit.

But Toyota doesn’t even have that, because it spent much of its allocation on partial Prius Plug-In and Prime credits. So it now has the worst of both worlds – late entry to the market, a lackluster first generation EV when everyone else is in the second or third generation, and no credits to making its car look more attractive than it is.

It has been said over the years that electric startups are only now dominating while the market is small, and once the big traditional automakers decide to take electric vehicles seriously, they will pounce and crush the startups with their superior expertise. But Toyota’s efforts with the mid-range bZ4X and its constant pitfalls in its electric-vehicle strategy suggest that it probably doesn’t actually have a secret master plan after all. And unless Toyota works together, it could be very disastrous, both for it and for Japan as a whole.

All that said, it’s possible Toyota could get a US electric car tax credit again if a bill to extend it passes through Congress. The House has already approved a Build Back Better bill that would not only extend credit limits for all manufacturers, but also make it easier for electric vehicle buyers to apply. But the Necessary Climate and Infrastructure package has been blocked by all 50 Senate Republicans and one coal investor, even though senators who support the bill represent tens of millions more Americans than those who oppose it, and the public consistently supports the bill by margins. wide.

There are some signs of life on the bill, but it’s been off for the better part of the year now. So, if you want electric cars to be affordable during a time of rising gas prices and climate change — the biggest problem humanity has ever faced — that needs to be addressed, that problem is on the ballot in November.

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