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Toyota Facing End Of the Road on EV Tax Credits

  • Automaker approaching 200,000-car cap on $7,500 subsidy
  • Japanese brand at center of policy fight over credit extension
2021 RAV4 Prime plug-in hybrid SUV
2021 RAV4 Prime plug-in hybrid SUVPhotographer: Kyle Grillot/Bloomberg

Toyota Motor Corp. is inching closer to using up a key U.S. tax credit for hybrid and electric vehicles, a milestone the automaker argues will raise its costs and hinder adoption of climate-friendly cars.

Current law allows automakers to offer a $7,500 tax credit to buyers of fully or partly electric cars, but only up to 200,000 per company. Demand for Toyota’s plug-in hybrid vehicles has steadily grown, especially as gasoline prices have surged past $4 a gallon, pushing up its cumulative sales of eligible vehicles to 183,000 as of the end of 2021, according to an analysis by BloombergNEF. The company reported sales of another 8,421 plug-in hybrid and electric cars in the first quarter.