Americans contemplating the purchase of a new electric vehicle should act fast, if they want to save themselves a cool $7,500 on the cost of a car.
Later today, the President is expected to sign his package of tax cuts and spending plans known as the Big Beautiful Bill. Even though it would hike the debt ceiling by $5 trillion, the Trump administration has decided effective October there is no fiscal leeway for Uncle Sam to subsidize the purchase of EVs any longer.
This could soon see a stampede of last-minute EV buyers in the next three months, at a time when carmakers—known in the industry as Original Equipment Manufacturers, or OEMs—may begin to reduce assembly line speed in order not to be stuck with excess inventory once the subsidies expire. Empty dealer lots could be the result, even before September ends.
“To mitigate the financial impact and potential inventory problems, we think OEMs may decide to reduce EV production in the U.S. starting as early as Q325,” UBS analysts wrote on Friday.
The federal tax credit will be history at the end of September—rather than the end of year as originally planned.
Importantly the leasing credit will also end then. EV leasing deals have become immensely popular since the $7,500 came with no strings attached that limited consumer EV choice, such as the degree to which the vehicle and its battery pack were manufactured in the United States.
The $4,000 purchase credit for used EVs is also going away come September.
Biden’s plan to close the affordability gap versus combustion engine cars
The federal EV tax credit was introduced at the start of 2023 as part of the Inflation Reduction Act, President Biden’s stimulus program so named because it passed at a time when the soaring cost of living had turned stimulus into a bad word.
The previous administration wanted to reduce the price gap between internal combustion engine cars and EVs, which often approached $10,000 because of the costly metals like lithium and nickel used in EV battery packs.
While the tax cr