It is based on the total amount of income tax on the tax return, not the amount that you owe.  It is best explained by example:

Let's say your 'usual' tax return shows $10,000 in income tax, and you had $12,000 of Federal income tax withheld from your paychecks.  That would result in a refund of $2000.

Now let's add the vehicle credit.  The $7500 offsets the $10,000, so now there is only $2500 of tax.  You still had $12,000 of Federal income tax withheld from your pay, so now it results in a refund of $9500.

However, any unused amount does not carry over.  So if your total income tax (Line 47 of your Form 1040) is less than $7500, part of the credit would be lost.