The US electric vehicle tax credit is set to expire on September 30, as part of a sweeping tax and budget legislation approved by Congress. This marks the end for $7,500 tax credits for buying or leasing new electric vehicles, as well as a $4,000 used EV credit that have driven green vehicle sales in recent years.
The move has been welcomed by the Electrification Coalition, an EV advocacy group, which states that the end of the tax credits will force America to miss out on its role in shaping the future of transportation. In contrast, China is seen as a leader in the transition to electric vehicles.
The phase-out of the tax credit comes after a significant expansion in 2022, which covered leased vehicles and lifted the per manufacturer cap. This change has been seen as a key factor in boosting EV sales.
Analysts predict that consumers will rush to buy electric vehicles before the end of September, expecting sharp declines in prices in the coming months. Barclays auto analyst Dan Levy notes that the bill’s softening of emissions regulations and penalties for automakers may slow down EV penetration in the US.
A Harvard University study forecasts a 6% reduction in EV adoption by 2030 due to the phase-out of tax credits, with estimated government savings of $169 billion over a decade. The move also comes after several automakers, including Stellantis and General Motors, have faced penalties for failing to meet fuel economy requirements.
The final bill has dropped planned annual fees for electric vehicles to pay for road repairs and a requirement that the US Postal Service sell off its EV delivery vehicles.
Source: https://www.reuters.com/sustainability/us-electric-vehicle-tax-breaks-will-expire-sept-30-2025-07-03