Kia Niro PHEV, Kia Sorento PHEV, Kia Sportage PHEV, Kia EV6
Justin Hart's picture

When Kia May Start To Lose Federal Tax Incentives For It's Plug-In Vehicles

Someone on social media asked me whether I might know when Kia would lose its eligibility for the U.S. federal Qualified Plug-in Electric Vehicle (PEV) Tax Credit of up to $7,500 on its plug-in vehicles. This incentive automatically begins phasing out in the second quarter following the calendar quarter in which 200,000 qualified plug-in electric vehicles have been sold by the manufacturer, cumulatively.
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In order to answer this question, I need to know how many plug-in vehicles with batteries of at least 5 kWh capacity Kia has sold since 2010, when the Qualified Plug-in Electric Vehicle (PEV) Tax Credit went into effect. I wasn’t able to find a single source for all of this information, but Kia first began selling plug-in electric vehicles in the U.S. in 2014 with the Soul EV. According to the Alternative Fuels Data Center, part of the U.S. Department of Energy, from 2014 through 2019, Kia sold a total of 18,336 plug-in vehicles in the U.S. that qualified for the tax incentive. Those sales broke down as follows: Niro PHEV (7,440), Soul EV (6,507), Optima PHEV (2,827), and finally the Niro EV (1,562). But what about more recently?

In 2020, Kia only had two plug-in electric vehicles on sale in the U.S. Clean Technica’s estimated figures for the 11 best selling electric vehicles in the U.S. through November of 2020 did not include any Kia models. Kia’s own sales numbers for the Niro model line for 2020 are 17,434 (which also include the Niro Hybrid, which isn’t a plug-in). Inside EVs shows an estimate of around 3,500 of those sales being the Niro EV model for its 2020 sales graph. At that time, Kia was growing its Niro EV sales in Europe at a brisk pace, so it is likely that more of Kia’s limited EV output was funneled there instead of the U.S. I estimate that of the remaining 14,000 or so Niro model line sales in the U.S. in 2020, between 5,000 - 9,000 were the PHEV model. So at most, Kia may have claimed around 12,500 more federal tax incentives that year.

2021 saw a significant uptick in Niro sales and Kia also debuted a new plug-in hybrid model, the Sorento PHEV. Total Niro model line sales for 2021 were: 26,192 and InsideEVs estimates that 8,717 of those were Niro EV models. I would estimate that between 4,000 - 7,000 more were the Niro PHEV model and that approximately 1,000 - 1,500 Sorento PHEVs sold in 2021 too. Combined then, Kia probably had at least 14,000 - 17,000 more federal tax incentives claimed in 2021.

2022 has already seen the release of a hot selling new EV from Kia, the EV6, and later this year another new plug-in hybrid will debut in the 2023 Sportage PHEV. Kia is also releasing a thoroughly redesigned and improved 2023 Niro model line later this year and all of these developments should lead to a healthy sales increase for Kia’s plug-in vehicles year over year. Through the end of Q1 (actually through April), Kia was in second place in U.S. EV sales, after Tesla and just ahead of Ford. This changed in May though when Ford retook second place (via a sharp uptick in Mustang Mach-E sales and the release of its newest EV, the F-150 Lightning).

To get back to the original question that sparked this piece, I need to estimate how many plug-in vehicles Kia might sell this year. Based on the data so far, and using earlier estimates I made for Kia’s Q1 U.S. PHEV sales as a model for the remainder of the year (plus another estimated 1,500 - 2,500 Sportage PHEV sales in the last 4 months of the year), my projected estimate for Kia is about 57,000 - 62,000 U.S. plug-in vehicle sales in 2022, with more than 40,000 of those being EVs and the rest PHEVs. That would mean an estimated cumulative total of somewhere north of 100,000 Kia plug-in vehicles sold by the end of this year. Let’s call it 105,000 for a touch of optimism. If Kia’s quarterly sales patterns grow more robustly than I have estimated (I estimated fairly static figures for the remainder of the year), and the first half of next year sees significant growth, it is possible that Kia may hit its 200,000 limit by the end of next year, and see its eligibility for for the federal tax credit begin to phase out as early as the first half of 2024.

Does that change your longer term plans? Do you think I might be too optimistic, or pessimistic? Please leave your questions or comments below.

Image provided by Kia and Justin Hart.

Justin Hart has owned and driven electric vehicles for over 14 years, including a first generation Nissan LEAF, second generation Chevy Volt, Tesla Model 3, an electric bicycle and most recently a Kia Sorento PHEV. He is also an avid SUP rider, poet, photographer and wine lover. He enjoys taking long EV and PHEV road trips to beautiful and serene places with the people he loves. Follow Justin on Twitter for daily KIA EV news coverage.


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Comments

Thank you so much for doing all the work to come up with your estimate. Now I am wondering how long Kia will be adding on the $5,000 to $7,500 premium for purchasing. I guess until people refuse to pay it.
Technically it isn't Kia adding that on, it is the dealership. So, if you can find a dealership that isn't charging the ":market adjustment" or whatever they call it, then you should be able to get a better price. I despise the dealership habits of doing this, it feels manipulative and egregious. It is, in my mind, a reason that dealerships are dooming themselves to irrelevance as more and more automakers look at ways to bypass dealerships for their electrified vehicle sales. We simply do not need dealerships anymore (service centers, yes, absolutely need those). Sorry I took so long to respond.
The 'market adjustment' or 'dealer specials' (ridiculous) goes to $10K in Northern California for some Kia & Hyundai hybrids and EVs (especially Niro EV and IONIQ 5). Chevy has been offering $6500 discounts for Bolt EUV - dealers have been marking them up by the same amount so technically they're trying to help by subsidizing...
I 100% agree! The dealer markups are just out of hand, ridiculous, and evidence of a terrible sales culture that all dealerships should be ashamed of. Honestly, I may never buy another vehicle from a dealer again after experiencing this trend and seeing outrageous markups as high as 100%! If that means I always have to buy used, or only buy Teslas or other start up brands that don’t have dealers, so be it. While not all dealerships do this, the majority seem to employ the practice and I think if manufacturers don’t do more to stamp it out, their dealers will only expedite the downfall of the manufacturers. I say that because the EV revolution is here, and if dealerships are going to be an impediment, then they are much more likely to become irrelevant, go bankrupt, or just close.