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Toyota Motor Corp. is inching closer to using up a key U.S. tax credit for hybrid and electric vehicles, a milestone the automaker argues will raise its costs and hinder adoption of climate-friendly cars.

Current law allows automakers to offer a $7,500 (¥980,000) tax credit to buyers of fully or partly electric cars, but only up to 200,000 per company. Demand for Toyota’s plug-in hybrid vehicles has steadily grown, especially as gasoline prices have surged past $4 a gallon, pushing up its cumulative sales of eligible vehicles to 183,000 as of the end of 2021, according to an analysis by BloombergNEF. The company reported sales of another 8,421 plug-in hybrid and electric cars in the first quarter.

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