Polestar electric vehicle won’t lose $7,500 tax credit because of Volvo sales

Up to 200,000 buyers of Volvo parent company Geely’s Polestar electric vehicle (EV) will still qualify for $7,500 in tax incentives, quelling fears that Volvo sales in the U.S. would affect that number, according to Green Car Reports. The news that Volvo and Polestar will each be able to sell 200,000 EVs that qualify for the full tax credit is good news for potential EV buyers of either brand.

Polestar plans to start selling the Polestar 2 all-electric sedan online in the second quarter of 2020. If Polestar sales were lumped together with Volvo brand EV sales, both brands would lose the appealing customer tax credit inducement sooner.

“We get the full credit, the $7,500 is there, and it’s not attached to Volvo,” Polestar spokesman J.P. Canton told Green Car Reports at a media event in San Francisco. “We have to sell 200,000 Polestars until it runs out.”

Polestar plans to follow Tesla’s EV game plan, according to the company. Polestar will begin by selling the Polestar 2 in a lavishly equipped $63,000 Launch Edition and follow Tesla’s strategy of subsequently selling more basic versions to get to Polestar’s $40,000 target price range.

During the period while Polestar sells only decidedly upscale vehicles, , which could last two years or longer, the $7,500 income tax credit incentive could swing hesitant buyers toward a purchase. An income tax credit is much more valuable than a tax deduction.

Tesla and General Motors have both sold more than 200,000 electric cars and are now working down a schedule with gradually diminishing tax credit incentives.

Tesla initially manufactured and sold expensive, luxury performance vehicles, namely the Model S and Model X, to make its mark in the automotive industry, build brand awareness, and fund the development of a less expensive car. Tesla CEO Elon Musk has often stated that Tesla’s ultimate goal is to manufacture an electric car affordable by most new car buyers.

Tesla’s first attempt at building an affordable EV, the Tesla Model 3, started rolling off the company’s Fremont, California, production line in the last quarter of 2017. Until early 2019, however, Model 3s had advanced driver assistance systems and self-driving upgrades that drove the average selling price closer to $50,000 than the long-promised $35,000 for a standard version.

Even today, the $35,000 Tesla Model 3 Standard Range is available only by calling or visiting a Tesla store. Customers can order all other Model 3 configurations and all Model S and Model X versions online.

CEO Elon Musk has shared his vision several times starting in 2018 of a smaller and even more affordable Tesla EV, possibly a Tesla mini car selling in the $25K price range.