By Grant Gerke, Senior Communications Specialist at the EVA

EV Terms | Plug-in Hybrid Vehicle (PHEV), EV Federal Tax Credits

Demand for electric vehicles (EV) is strong in the U.S. In January 2023, EV market share jumped to 10% of all car sales for the U.S. market. And a new 2022 survey from Consumer Reports shows that 30% of all licensed drivers in the market to buy or lease a new vehicle were not even considering a conventional gas vehicle.

That’s big news for EV supporters and clean air advocates, but zooming out shows that automakers are not meeting this demand for electric vehicles. GM and Mary Barra recently announced that the low-cost Chevy Bolt is being discontinued on the company’s earnings call. This production cut is a tough pill to swallow since the compact Bolt is the most affordable EV on the U.S. market; and Chevy dealerships have a good presence in many markets, rural and city.

“Consumers can’t buy EVs that don’t exist, but that doesn’t mean they’ll buy a new conventional gasoline vehicle instead,” says Chris Harto, Senior Policy Analyst, at Consumer Reports. “It’s called the Osborne Effect: consumers will hold off on purchasing a soon-to-be obsolete item and wait for a newer, better version. Automakers could end up with lots full of conventional gasoline cars and no buyers for them.”

According to Barra, GM will build 70,000 more Bolts before the end of the year. Plus, another positive is that GM is planning “to produce 400,000 EVs over the course of 2022, 2023, and the first half of 2024, including 50,000 EVs in North America in the first half of this year and double this number in the second half.”

Toyota Talks Electrification, But Where Are the EVs?

In April, Toyota released the sleek new 2023 Toyota Prius Prime plug-in hybrid (PHEV). The design is aerodynamic and eye-catching, and the EV goes 44 miles on battery. So that’s a step up from a paltry low 20 electric range a decade ago, but Toyota will only – produce – sell 15,000 Prius Primes each year in the U.S. Below is my friendly exchange with John Voelcker, automotive writer for Road and Track, on this topic:

In 2019, Toyota announced the RAV4 Prime Plug-in SUV at the LA Auto Show, and this new PHEV at the time would be able to do 53 electric miles before moving to gas.

However, Toyota only sold 30,907 RAV4 Primes in 2020 and 2021 – per evadoption.com – and they are tough to find for an EV advocate, let alone an average car buyer. Plus, the company is waging an all-out greenwashing campaign with its “electrification” advertising in 2023.

U.S. Legislation Offers a Carrot and Stick

The current White House administration and the U.S. Congress passed the Inflation Act in 2022. This legislation provides federal tax credits worth $7,500 and $3,500 to consumers who buy all-electric vehicles or plug-in hybrid cars and trucks – see the EVA’s tax credit guide.

The stick is the new EPA clean air standards that were just released, which would limit vehicle tailpipe emissions for model years 2027 through 2032. This type of legislation is similar to the EU’s stricter carbon tax that came into play in 2020 for European automakers and spurred greater EV adoption going forward.

“It’s time for regulators and automakers to hit the accelerator on electric vehicle production,” said Chris Harto, senior energy policy analyst at CR. “Right now, even under the most aggressive announced plans to ramp up production, EV demand will not be satisfied for consumers who say they would definitely buy or lease one today until 2030.”

Find Answers to Your Federal EV Tax Credits

The IRA federal EV tax credit has numerous battery material and domestic manufacturing requirements. Download our EV Tax Credit Guide and find which EV models make the cut for a full or half tax credit as of early April 2023.