Automakers push EV deals as $7.5k US tax credit ends soon

US federal tax credits of US$7,500 for electric vehicle (EV) purchases are set to expire on September 30, 2025.

These credits have been available since 2008 to encourage EV adoption, but recent legislative changes by Congress will end them.

Tesla is urging customers to buy before the deadline, while Ford offers free home chargers to attract buyers.

The tax credit, part of the 2022 Inflation Reduction Act, extends benefits for both new and used EVs but includes eligibility requirements regarding domestic production and battery material sourcing.

Analysts warn that discontinuing these subsidies could adversely affect EV sales, which have already experienced a slowdown in recent years.

Without the credits, EV registrations could drop by 27%, mirroring declines seen in Germany after subsidy cuts.

Analysts expect a pre-deadline sales surge followed by a slowdown, marking a shift in US EV policy strategy.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Germany’s experience foreshadows potential U.S. market contraction

Germany offers a preview of what might happen in the U.S. after EV subsidies end. When Germany removed its generous €9,000 EV subsidies in late 2023, sales dropped sharply.

Before the subsidy removal, Germany had seen its EV market share climb to 26% of new car registrations in 2021, more than doubling from 13.5% in 2020 1.

This aligns with academic predictions for the U.S. market, where researchers from UC Berkeley, Duke, and Stanford forecast a 27% drop in EV registrations after tax credits disappear [per the original article].

German EV subsidies were highly effective while active, with government spending reaching €3.1 billion in 2021 alone as applications for EV incentives more than doubled from 255,000 to 625,260 in a single year 1.

The price sensitivity of EV buyers remains a critical factor in both markets, with U.S. EVs still selling for nearly $10,000 more than the average new vehicle according to Cox Automotive data.