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Toyota just launched the BEV program but has spent all of its tax credits on hybrids.

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Toyota has sold its 200,000th plug-in vehicle in the US, meaning its access to the $7,500 federal tax credit will end within the next 15 months.

The company joins Tesla and GM who are no longer eligible for loans, and Ford and Nissan are also expected to hit the cap later this year.

The credits are designed to be phased out, so those with a current Toyota order will still receive full credit if they receive delivery before the end of this quarter.

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

This moment may come as a surprise to many (although Toyota warned us about this back in April), as Toyota has yet to sell a single BEV. It had a short-lived RAV4 EV program in the early 2010s with a Tesla-supplied electric powertrain, but that was only about 2,500 units. And recently, the company finally shipped its first BEV, the Toyota bZ4X, but only a few thousand units have been sold so far (and are currently being recalled to keep the wheels from falling off).

But Toyota has been selling low-range plug-in hybrids all along, with the original 5.2kW Prius plug-in and the 8.8kW Prius Prime (which we at Electrek weren’t fans of). The US federal tax credit extends to plug-in vehicles with a battery capacity greater than 5 kWh with a benefit of $500 per kWh until the $7,500 cap is reached.

As such, low-range vehicles such as a Plug-In Prius with a barely over threshold battery are eligible for the lowest possible credit of $2,500, while the Prime gets $4,500. The newer RAV4 Prime PHEV has an 18kWh battery, which is enough to get a full $7,500 credit.

Because of all these plug-in hybrid sales, Toyota spent its 200,000 credits mostly on low-range hybrids, leaving most of the credit value on the table.

Now he is finally starting to sell electric vehicles with the bZ4X, but so far slowly. Toyota expects to sell only about 7,000 units this year, meaning that only a couple of thousand BEV customers will receive the full tax credit, which expires in three months. This is assuming he can deal with the current recall issues quickly.

Electrek’s view

We’ve written extensively about Toyota’s flawed (or downright hostile) EV strategy, and this is another sign of it. Instead of making attractive electric vehicles, they learned the rules and built PHEVs with “minimal flair”. Toyota cynically increased the Prius battery size just above the minimum amount to qualify for EV credits and decals for the carpool, while others in the industry are actually taking steps to make electric cars better.

As a result, Toyota has missed out on several hundred million dollars in loans to its customers, and to make matters worse, its new EV now looks a lot less interesting compared to other EVs in its class like the ID.4, EV6 and Ioniq 5. Not only better cars (because the manufacturers worked out some tricks with the previous generation of electric cars), but also cheaper if credits are taken into account.

One of the often cited drawbacks of EV loan design is that it can reward latecomers to the market. Companies that take EVs seriously and enter the market early, then run out of loans, end up at a disadvantage compared to other EVs in their class that arrive later and can still benefit from credit.

But Toyota doesn’t even have that because it has spent so much of its appropriation on partial loans for the Prius Plug-In and Prime. So now he has the worst of both worlds – a late market launch, a lackluster first-generation electric car when everyone else is running a second or third generation, and no credit to make his car look more attractive than it is.

It has been said for years that electric upstarts only dominate now while the market is small, and that once the big traditional automakers decide to take electric vehicles seriously, they will swoop in and crush startups with their superior expertise. But Toyota’s efforts with the mediocre bZ4X and its constant missteps in EV strategy suggest that it may not actually have a secret master plan. And if Toyota does not take action, it could be a disaster for both it and Japan as a whole.

However, it is possible that Toyota could once again gain access to the U.S. electric vehicle tax credit if a bill to extend it passes Congress. The House of Representatives has already approved the Build Back Better bill, which will not only expand credit limits for all manufacturers, but also make it easier for buyers of electric vehicles to register them. But this much-needed climate and infrastructure package has been blocked by all 50 Senate Republicans and one coal-investing Democrat, despite the fact that senators supporting the bill represent many tens of millions more Americans than its opponents, and the public has consistently supported the bill by a wide margin. . .

There are some signs of life on the bill, but it has stalled for most of the year. So if you want electric vehicles to be more affordable in times of high gas prices and to tackle climate change – the biggest problem humanity has ever faced – then this question is up for a vote this November.

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