The end of US tax credits for buying electric vehicles has changed the market in ways that are still unfolding.
I spoke this week with people closely monitoring the auto industry to get a sense of what’s next. They said the loss of federal incentives is likely to dampen shoppers’ enthusiasm, but the upcoming arrival of several dozen new or redesigned models could help fuel a comeback.
“I think the dust needs to settle for everyone to figure out what’s going to happen near term,” said Stephanie Valdez Streaty, director of industry insights for Cox Automotive.
Until October 1, the federal government offered a tax credit of up to $7,500 for the purchase of a qualifying new EV, and $3,000 for a qualifying used EV. In addition, there was a $7,500 incentive available for new EV leases. Those are now gone with the passage in July of the One Big Beautiful Bill Act, which sought to undo clean energy policies as part of a larger package of tax cuts and spending.
EV sales surged in recent months as customers aimed to get the credits before they expired. Now, without the credits, sales are likely to drop this month and the rest of this year.
But automakers have taken steps to soften the blow. Ford and General Motors have said they will continue to offer a $7,500 credit on leases. They can do this because their in-house finance companies purchased the vehicles while the credits were still active and the companies can pass on the savings to consumers, even after October 1.
Hyundai is offering a promotion in which it is selling and leasing its 2026 Ioniq 5 with price cuts of up to $9,800, effectively providing the equivalent of the tax credit and then some.