Are EV Dealers Claiming $7500 Tax Credit For Themselves? GM, Nissan Think Not


A dramatic report from a Virginia-based non-profit claims that Chevrolet dealerships are stealing a federal tax credit from customers, but General Motors says that’s not the case, and that the accusations are “confused.”

To help offset the high cost of new green cars, the federal government offers buyers of electric cars like the Chevrolet Volt and Nissan Leaf a $7500 tax credit. However, the National Legal and Policy Center says it has identified two dealerships that titled a new Volt and claimed the $7500 tax incentive for their own coffers, then resold the vehicle as used. Buyers of a used Volt are ineligible for the tax break, leading the NLPC to accuse Chevrolet dealerships of “gaming” the tax credit.

In response to the report, Volt spokesman Rob Peterson says there is little cause for concern. The two dealerships contacted by the NLPC are legally unable to sell a new Chevrolet Volt.  One is a Kia dealership in California, which can’t sell the Chevy for obvious reasons; the other is a Chevrolet dealer in Chicago, which can’t sell a Volt as a new vehicle as Illinois is outside of the car’s launch markets.

Peterson said there’s no real issue with the practice so long as dealerships are honest with customers -- and based on the NLPC report, both dealers willingly inform customers that the cars are technically used, and are therefore ineligible for the tax credit.

In order to sell a Volt, the aforementioned dealerships must buy one from a Chevrolet showroom in one of the Volt’s launch markets. When that happens, the purchasing dealership (whether Kia or Chicago-area Chevy) has to title the vehicle, meaning it henceforth must be sold as “used.” The law clearly states only the first title holder is eligible for the $7500 incentive, meaning that the purchasing dealership gets the money instead of the end consumer.

Despite what the NLPC claims, this situation does not occur when dealerships perform “dealer-to-dealer” trades to swap Chevrolet Volts between showroom lots, Peterson said. The car’s title is simply transferred from one dealer to the next.

“There’s no question that the NLPC is confused,” Peterson said.

So why would a customer buy a Chevrolet Volt for which they can’t claim the tax credit? One reason may be early-adopter status and the car’s general scarcity. Only about 200 Volts are available at dealerships nationwide, and the car is selling so quickly that Peterson jokes, “We don’t sell Volts at the moment -- it’s almost like we deliver them.”

A customer in a non-launch market might be willing to forego the tax bonus if they can be the first in their town to drive a Volt. Peterson also cites the case of Jim-Ellis Chevrolet in Atlanta, Georgia: The dealership can’t yet sell new Volts, but bought from a showroom in New York so that it would attract customer attention. Peterson claims the “halo car” draws about 25 people per week to the Atlanta dealership.

The Nissan Leaf electric car also is eligible for the government’s $7500 tax credit, but Nissan spokeswoman Katherine Zachary told us there won’t be any issues of dealers selling the Leaf used. For now, the Leaf is only available to customers who have reserved and negotiated their new car purchase online. Nissan only delivers vehicles to customers residing in the car’s launch markets, and since supplies are directly tied to orders, it’s unlikely a similar situation would play out with the Leaf. Nobody residing outside the Leaf’s launch regions can buy the car, nor can another dealer poach one from a Nissan showroom.

Source: NLPC, Chevrolet, Nissan

The whole thing is a scam. I signed up for the Leaf with the governments assurance that the first 200,000 buyers would get the full credit and then it would be phased out. Now they throw a wrench into that saying the credit expires on 12/31/2011 and only 9,000 LEAFS will have been sold by that time in the USA (3700 currently sold as of 9/28/2011). This means only 9,000 of the promised 200,000 will get the rebate and only those buyers in California, Washington (of course where polticians live), Arizona and a few others will benefit and the rest of us are out of luck. What's worse is that the USA is allowing these companies--NISSAN and GM to continue advertising the CREDITED down price of $26,820 for the LEAF and about $35,000 for the GM when they know fully well they won't get it at that price as the law is set to expire before most anyone gets delivery. What a complete farce. Before GM killed the electric car. Now Congress killed it even before it got a head start. The industry is DEAD DEAD DEAD as of this December!
Just goes to show the tax credits aren't needed when a car first comes out, don't they know early adopters will pay the premium? Why make tax payers pay?
The point is, the dealerships are getting the tax credit, which Peterson does not deny. "The law clearly states only the first title holder is eligible for the $7500 incentive, meaning that the purchasing dealership gets the money instead of the end consumer." And it's likely that this is much more widespread than one or two cars. That's all that one reporter found, after a couple of phone calls. That doesn't mean there aren't more out there.
"The law clearly states only the first title holder is eligible for the $7500 incentive, meaning that the purchasing dealership gets the money instead of the end consumer." Dealers should NOT be claiming the $7,500 credit. Period. The program was set up to give CONSUMERS a tax credit on new Volts and Leafs. The dealers who claim the credits ARE gaming the system and it should be stopped immediately. It's especially appalling that GM dealerships are doing this, considering that they received a HUGE taxpayer funded bailout.
Mike, did you actually read the article? In line to your note to Jerry "we are not talking about..." I'd ask you the same thing. We aren't talking about GM scamming the taxpayer and car buyer. There are only a total of two or three cars in question, one of which was bought by a KIA dealership for whatever reason they wanted it. Obviously they wanted it. A new car buyer looking for a new Volt isn't likely to go shpping at a KIA dealership, are they? The Atlanta GM dealership is in an area that can't get them now, but wanted it for marketing purposes. And it worked - they are getting traffic from folks wanting to see it. Sounds like the Volt is popular, but unavailble, in Atlanta. Anyway, they can buy whatever they want. Just can't sell it as new.
Jerry, we are not talking about back ordered cars here, we are speaking about Government Motors scamming the taxpayer and the car buyer. That is just wrong. But what would one expect out of this administration and their car company? I guess the Volt is not as popular as everyone is being led to believe. The Volt will go down in History as... Can you say "Edsel"?
I don't understand why the same Chicago dealer couldn't buy an orphaned Nissan Leaf. Some people have been waiting since October orders to have a Leaf produced and arrive at the dealer. (I am one of them.) For some, the nine month order - delivery time lag is too long and when the car shows up at the dealer, the original orderer has moved on. That orphan is then available for purchase by the Chicago dealer. He gets the $7,500 rebate and sells the Nissan as a used car. Why not?

buyer's guide

Find vehicle reviews, photos, & pricing

our instagram

get Automobile Magazine

Subscribe to the magazine and save up to 84% off the newsstand price


new cars

Read Related Articles