Just after midnight this morning, in addition to getting a federal government shutdown, we also lost all federal tax credits for new electric vehicles, used electric vehicles, and commercial electric vehicles.
Sadly, this was not a surprise. During last year's election, the Trump campaign made no secret of its disgust toward clean vehicles (and clean energy in general), and it promised to end subsidies meant to encourage Americans to switch from internal combustion engines to EVs. Once in power, the Republicans moved quickly to make this happen.
Federal clean vehicle incentives had only recently been revamped in then-US President Joe Biden's massive investment in clean technologies as part of the Inflation Reduction Act of 2022. To qualify for the $7,500 tax credit, a new EV had to have its final assembly in North America, and certain percentages of its battery content needed to be domestically sourced.
A separate $7,500 commercial tax credit for new EVs was created, which did not require domestic assembly or content and which applied to leased EVs. And Congress finally added a $4,000 tax credit for the purchase of a used EV.
Visiting the relevant IRS page today, though, you'll see an update declaring that the "New Clean Vehicle Credit, Previously-Owned Clean Vehicle Credit, and Qualified Commercial Clean Vehicle Credit are not available for vehicles acquired after Sept. 30, 2025."
Paradoxically, the deadline for the tax credit's death has probably helped goose EV sales in the US for Q3 as buyers rushed to dealerships to take advantage of the discount. Since 2023, it has been applicable at the point of purchase rather than when the buyer files that year's tax return.
There is one bit of less-bad news regarding the tax credits: The credit for installing home charging equipment remains on the books until June 30, 2026.
Carmakers respond
Different automakers are approaching the situation differently. Yesterday, it emerged that both Ford and General Motors have come up with a temporary solution: buying all their own EVs before the credit expired, then leasing those vehicles to customers through dealerships at a $7,500 discount. That's good news if you're looking to lease an F-150 Lightning; a Cadillac Lyriq, Optiq, or Vistiq; a GMC Sierra EV; or a Chevrolet Blazer, Equinox, or Silverado.
Meanwhile, Tesla, which is facing a constantly eroding market share due to stale product lines and its CEO's political activity, has chosen a different path. Reuters reports this morning that lease prices for the Model Y and Model 3 have gone up.
A Model Y lease would have cost between $479 and $529 per month to lease yesterday; today, that price range is $529–$599 a month. Similarly, a Model 3 lease has increased from between $349 and $699 a month to between $429 and $759 a month.
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