The Chevy Volt is a much anticipated American electric car. It has been announced that the Volt will have a price of $41,000 offset by a $7,500 tax credit. 

The age of the electric car is upon us. This is the natural continuation of the evolution of the hybrid market. The question is whether the Volt will be a game changer for the American auto industry or much ado about nothing. The same can be said for electric cars in general. 

For a car that has a range of only 40 miles or so, the Volt would certainly seem to come with a very hefty price. Such is the price of progress as they like to say. The electric car is seen as a means to get off of the evils of oil. Of course, it more or less means switching to coal power, but that is a story for another day. 

The government is getting behind the electric move in a big way. It is offering up huge tax credits to try to launch the industry with the finicky American consumer market. Much like it did when hybrids came onto the market, the government is doing this through tax credits. In this case, the tax credit is a rather massive $7,500. That is an incredibly valuable piece of ammunition when it comes to knocking down your tax bill. 

The thing to remember about tax credits is they are far more valuable than tax deductions. A tax deduction knocks down your gross income before the actually tax you pay is determined. A tax credit is applied to the actual amount of tax you must write a check for to Uncle Sam. If you owe Uncle Sam $10,000 at the end of the year and buy a Volt, you would end up owing only $2,500. 

Will the hefty tax credit for the Chevy Volt make the car a success? No. It will help, but the Volt will ultimately stand on its own merits. If it is a solid car, it will mark a new age of electric cars in the American auto industry. If it is not, it won’t.