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Say it ain’t so. There’s been an interesting development in the world of plug-in hybrids and electric vehicles. Toyota is officially ineligible for the full federal electric vehicle tax credit of $7,500. The United States government will begin phasing out the incentive for the Japanese automaker, just as it has with Tesla. So, the impressive Toyota RAV4 Prime will no longer benefit from one of the greatest incentives in automotive history.

The Toyota RAV4 Prime just got more expensive, and it isn’t Toyota’s fault

A red 2022 Toyota RAV4 Prime plug-in hybrid SUV is parked outdoors.
The 2022 Toyota RAV4 Prime | Toyota

The federal electric vehicle tax incentive program is under scrutiny as automakers realize that the thresholds for phasing out the incentive may be far too low. Automakers are asking the government to reconsider the terms of the incentive as many brands inch closer to ineligibility.

This hurts Toyota because it stunts the growth of two of the company’s newest nameplates, the bZ4X and RAV4 Prime. The Toyota RAV4 Prime was an incredible deal when it was eligible for the full incentive. It starts at $40,300. The tax credit brought its price closer to $32,800 for those lucky enough to take advantage of the incentive.

That’s an incredible price considering the RAV4 Prime’s specs. The plug-in hybrid SUV achieves a whopping 40 miles per gallon in the city and 38 miles per gallon on the highway. It gets 38 miles per gallon combined. The plug-in hybrid SUV is able to travel for 42 miles on just electricity.

Instead of benefiting from the full incentive, the RAV4 Prime will only be eligible for a $3,750 tax credit since Toyota has officially reached the 200,000 PHEV and EVs sold threshold. So, buyers will pay closer to $36,550 for the exciting new SUV.

Is the RAV4 Prime still worth buying?

The Toyota RAV4 Prime is still worth the money, despite being more expensive because of its tax credit eligibility. Frankly, paying more money for the same vehicle sucks, but it isn’t worse than paying the plug-in hybrid SUV’s full price without any incentive at all.

Take this puzzling new development as a warning from the government. America is pro-EV as far as policies go, but if you snooze on the incentives being offered, then you risk losing thousands of dollars in savings. Those savings could be the difference between getting a RAV4 Prime and wishing that you could.

The Toyota bZ4X just took a major blow

The Toyota bZ4X is far from the first electric SUV on the market. The bZ4X is trailing behind competitors. Its performance specs aren’t exactly what most consumers expected after waiting for the EV for so long.

The bZ4X will now only be eligible for a $3,750 tax credit. Toyota fans expected the electric SUV to have affordability on its side, but it’s already more expensive than some of its more enticing rivals because of tax incentive eligibility. According to Car and Driver, the bZ4X XLE starts at $43,215. Are you willing to spend nearly $40K on Toyota’s new electric SUV?

Read more about the Toyota RAV4 Prime in the next article below.