Six PHEVs Currently Qualify for the Maximum $7,500 Federal EV Tax Credit

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Depending on your point-of-view, plug-in hybrid electric vehicles (PHEVs) are either an efficient use of batteries or are an abomination and shouldn’t be considered electric vehicles. Like most things in life, however, the correct answer is it really depends on the PHEV and plug-in habits of the driver.

A PHEV with an electric range of at least about 35 miles and which is regularly plugged in and driven in EV mode is a great solution for many American drivers. But unfortunately, the hugely flawed design of the federal EV tax credit formula rewards OEMs for producing low-mile electric range PHEVs, and consumers for buying them — who in some cases rarely or never plug them in.

One of the main flaws in the tax credit formula is that a PHEV with a 16 kWh battery qualifies for the maximum $7,500 tax credit — the same, for example, as the highly efficient Hyundai Kona BEV that has a range of 258 miles and battery pack of 64 kWh. The Kona achieves a highly-efficient ratio of 4.03 miles per kWh versus a paltry 1.24 (21 miles from a 17 kWh battery).

In the chart above you can see that there are six PHEVs that currently qualify for the $7,500 maximum tax credit, and their electric range is from a low of 21 miles for the Jeep Wrangler 4xe to a high of 65 miles for the Polestar 1. They also range in MSRP from about $38,000 for the Toyota RAV4 Prime to $165,000 for the Polestar 1. 

In part 3 of the EVAdoption series on the proposed tax credit changes we covered the potential MSRP cap of $80,000 which would exclude both the Polestar 1 and Karma Revero GT (rightly so in our opinion). But perhaps the bigger flaw that desperately needs fixing is the lack of a minimum electric range and efficiency metric for PHEVs. The highly inefficient Jeep Wrangler 4xe that gets only a little more than 1 mile of range from each kWh of its battery should not receive any tax credit amount, let alone the same as longer range and efficient PHEVs and BEVs.

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Average Range and Battery Size of PHEVs Currently Available in the US

With 32 PHEVs currently available in the US (as of September 21, 2021), they come in a wide variety of types, price, EPA range, and battery size. In the chart below we’ve analyzed the 32 PHEVs across 6 metrics. The mean (commonly referred to as the average) range is 24.7 miles and mean battery size is 13.5 kWh. When looking at the median, however, range drops to 21 miles and battery size down to 12.5 kWh.

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