EV Tax Credit Set to End September 30, Prompting Carmaker Price Adjustments

Washington D.C. – The federal tax credits for electric vehicles (EVs), offering up to $7,500 for new purchases and $4,000 for used, are slated to expire on September 30, 2025. This accelerated termination, enacted through the "Big Beautiful Bill" signed by President Donald Trump, marks a significant shift from the previous 2032 expiration date under the Inflation Reduction Act. The impending deadline has prompted car manufacturers to implement aggressive pricing strategies and incentives to boost sales.

Automakers are actively encouraging consumers to buy before the credit disappears. Tesla's homepage prominently displays a banner stating, "$7,500 Federal Tax Credit Ending. Take Delivery by September 30, 2025." Similarly, Ford Motor has extended its offer of free home chargers and installation through September to attract potential EV buyers.

Industry analysts anticipate a surge in EV sales during the third quarter of 2025 as consumers rush to capitalize on the remaining incentives. However, this "pre-buy" period is expected to be followed by a potential slowdown in sales. A joint study by professors from UC Berkeley, Duke, and Stanford predicted a 27% drop in EV registrations without the credit.

The expiration of these subsidies is likely to disproportionately affect lower and middle-income consumers. Electric vehicles typically carry a higher upfront cost compared to their gasoline-powered counterparts, and the tax credit has historically helped bridge this price gap. As economist Alan Gin noted, the end of the credit "will cause sales to slow," particularly for those with less disposable income.

In response to past reductions or eliminations of federal incentives, automakers have historically introduced their own discounts. For instance, Ford cut prices on its Mustang Mach-E after it lost a $3,750 tax credit in January 2024, and GM offered a $7,500 incentive on models no longer qualifying for federal credits. Rivian's finance chief, Claire McDonough, indicated that the company might introduce additional incentives, including financing deals, once the federal credits end, depending on broader industry reactions.