In anticipation of the federal EV tax credit ending on September 30, 2025, automakers are employing various strategies to maintain demand and adapt to the changing landscape including boosting sales, leveraging the “leasing loophole”, lobbying the government, changing production and lowering prices.
A Closer Look at These Tactics
1. Boosting sales and offering incentives before the deadline
- Automakers are actively promoting the $7,500 tax credit to incentivize buyers to purchase EVs before the September deadline.
- Some are offering additional incentives like free home chargers and installation or financing deals to further entice buyers.
- The industry anticipates a surge in EV sales leading up to the deadline.
2. Leveraging the "leasing loophole"
- Leased EVs are treated as commercial vehicles under the Inflation Reduction Act, which allows the leasing company (often the automaker's finance arm) to claim the $7,500 tax credit without the same strict eligibility requirements (like price caps, income caps, or sourcing regulations) that apply to consumer purchases.
- Automakers can then pass these savings on to consumers in the form of lower lease payments.
- This "loophole" has contributed to the recent increase in EV leasing. However, this loophole is also scheduled to end after September 30, 2025.
3. Lobbying efforts
- Automakers and industry groups are lobbying the government to either extend the tax credits or phase them out gradually over several years.
- They are emphasizing the importance of these credits in supporting EV and battery manufacturing, jobs, and the overall transition to electric vehicles.
4. Rethinking production and pricing
- Automakers acknowledge that the loss of tax credits will likely slow down EV sales, at least initially.
- Some are re-evaluating their EV production plans and may adjust output to match expected demand.
- Others are looking to introduce additional incentives and financing deals to make up for the loss of the tax credit.
- There's a growing focus on bringing down the cost of EVs to make them more affordable without government subsidies.
In essence, automakers are pursuing a multi-pronged approach, including accelerating current sales, utilizing existing mechanisms like leasing, advocating for policy adjustments, and strategically adapting their long-term production and pricing strategies in response to the ending of the federal EV tax credit.
According to an article by CNBC, automakers are responding quickly to the coming loss of federal tax credits for electric cars.
General Motors CFO Paul Jacobson says that GM is anticipating headwinds to EV profitability as a result of the government removing incentives and expect a rush on EVs before the tax credits expire.
Keep in mind that EV sales amount to 46,300 units sold in the second quarter of 2025 compared with GM’s total vehicle sales of 974,000 units.
Ford recently announced its “Universal EV Program” that is focused on lower cost electric vehicles, starting with a mid-sized EV pickup for just $30,000.
Ford CEO Jim Farley says the new program will bolster ford as competition from Chinese EV makers such as BYD continues to rise. Farley says, “Ford will bring cost level down and reshape plants to make the EVs people really want.”
