Tesla, Ford race to boost EV sales as $7,500 US tax credit nears expiry

Top automakers from Tesla to Ford are pushing customers to purchase EVs ahead of the September expiration of an important $7,500 federal tax credit.

This week, a banner on Tesla’s website said, “Federal Tax Credit Ending $7,500. Delivery Due By September 30, 2025."

Ford similarly announced free home chargers, and their installation would also be available through that same deadline, underlining the lengths manufacturers are going to secure sales in the third quarter.

The move comes as Congress pushes to scrap the $7,500 incentive for new EVs and the $4,000 one for used car inventory.

These credits, which were first enacted in 2008 and expanded by the 2022 Inflation Reduction Act, have been critical in making EVs more accessible.

The law also broadened the benefit but limited access to US-built vehicles with specific domestic content.

Shares of Tesla were up 0.08% on Wednesday. Ford stock was up more than 1%.

Consumer rush is expected before September 30

With the tax credit about to expire, industry analysts and dealers predict a rush of purchasers looking to cash in before the deadline.

"We believe (the third quarter) will see a significant EV pre-buy, with sharp declines in the months to follow," said Barclays analysts in a recent note.

Sales manager Dmitry Agapitov of Northwood Chevrolet and Hyundai in Eureka, California, stated that previous deadlines have resulted in considerable increases in client engagement.

He expects a similar response now. "We anticipate it to play a factor," Agapitov added, alluding to the credit's impending expiration.

Without incentives, the electric vehicle market faces an uncertain future

If the tax incentive expires as expected, EV sales in the United States could suffer significantly.

A joint study conducted in November by experts from the University of California, Berkeley, Duke, and Stanford found that without the subsidy, electric vehicle registrations might plummet by up to 27%.

The predicted sales decline would follow recent trends in Europe, where EV sales in Germany fell after government incentives expired in late 2023.

As US purchasers face high EV pricing and inadequate charging infrastructure, the lack of financial incentives may further impede adoption.

According to Cox Automotive data, the average EV pricing in May was over $58,000, which is roughly $10,000 higher than the industry average for new automobiles.

Political pressure and industry response

Since late 2024, former President Donald Trump's staff has been attempting to undermine federal support for electric vehicles.

The risk of policy reversal has pushed some consumers to act now rather than later.

"If anyone hasn't purchased an EV yet, they're likely to be encouraged to do so in the third quarter," said Sam Fiorani, vice president of AutoForecast Solutions. "Consumers believe there is a deadline to reach now."

Historically, automakers have responded to subsidy cuts by expanding direct incentives.

When Ford's Mustang Mach-E lost a partial credit in January 2024, the firm reduced pricing in response to declining sales. GM also replied with a $7,500 discount on cars that became ineligible.