American motorists can today collect federal tax credits of up to $7,500 for buying or leasing a new battery-electric vehicle. Those incentives have helped drive a surge in demand over the past six years, EVs now accounting for about 8% of the U.S. market. But what happens when the credits go away on September 30?
Related: BMW Already Offering Huge Discounts on 2026 Electric Models
That’s a big problem for automakers who are continuing to roll out new models and who can’t afford to lose sales momentum. But it’s great news for buyers, with those manufacturers intending to keep momentum going by offering big incentives of their own – especially for lease customers.
Expect EV sales to “flatten considerably,” said Ed Kim, CEO of AutoPacific, Inc. Based on a survey of potential buyers, the research firm has halved the market share for all-electric vehicles it had previously forecast for the rest of the decade.
Congress Calls it Quits
Currently, motorists can receive up to $7,500 when they purchase a qualified EV. That depends upon factors such as where the vehicle and its batteries were produced, as well as the MSRP and a buyer’s income. A loophole made it even easier for those who want an EV to qualify by leasing – which has now become the favored route for most customers.
The incentives go away, however, on September 30 as a result of language written into the federal spending measure, the so-called “One Big Beautiful Act of 2025,” passed by Congress back in July. It was one of a number of measures backed by the Trump administration expected to impact EV sales.
Unfortunate Timing
The timing is particularly “unfortunate,” said Kim, as AutoPacific’s new research found 32% of potential EV buyers likely to walk away because the lack of incentives will translate into an effective price hike.
“The EV market in the U.S. is headed for a rough patch with market share growth stalled due to multiple factors related to lack of affordability. Consumer awareness of the Federal tax credit for EV purchases and leases as well as intent to buy an EV because of it have grown since 2024, but consumers interested in one will soon find them significantly less affordable.”
Just a year ago, battery-electric vehicles captured an 8% share of the U.S. market. With the pro-EV Biden administration in power, AutoPacific expected that to jump to 11% in 2025, and continuing climbing to 25% by 2029. Under Trump, it now forecasts share holding flat at 8% this year and growing to just 12% by 2029.
Automakers Roll Out their Own Incentives
EV sales have held up fairly well in recent months, analysts agreeing that reflects the fact that many buyers are racing to claim tax credits before they expire.
Automakers are hoping to keep the momentum going by offering increasingly lavish incentives. Lucid, for example, is providing its own $7,500 “EV credit” for those who order the start-up’s new Gravity SUV by September 30 but who might not take delivery until after federal incentives end.
"We want to reassure customers who have already ordered a vehicle, which may not be built and delivered by the end of September, that they will still benefit from the $7,500 leasing tax credit, despite the impending expiration," the automaker said in a statement.
Time for the Big Deals
Industry watchers expect to see manufacturers announce a flood of similar offers as the federal deadline approaches. The good news for potential buyers is that they don’t have to wait. Many already are double-dipping, claiming big discounts even while still qualifying for the tax credits.
Many of the discounts focus on what the industry likes to call “subvented” leases. That’s a fancy way of saying subsidized. According to a report by Bloomberg, some dealers are now offering slow-selling entry-level EVs for as little as $100 a month. Deals often vary by region but the news service found Honda discounting the midsize Prologue EV to as little as $200 a month on a 48-month lease. That’s a substantial deal considering the MSRP starts just under $49,000. Mercedes-Benz, meanwhile, has cut the monthly lease rate for its slow-selling EQB battery-electric crossover to as little as $352 a month – after down payment. It carries a list price of $53,000.
“I always hate to say ‘it’s unprecedented’ with the auto industry, but we’ve never really seen anything like this,” Kevin Roberts, director of industry analytics at CarGurus, told Bloomberg.
Between a Rock and a Hard Place
Part of the challenge for automakers is the fact that so many new EVs have come to market this year, noted Sam Fiorani, lead analyst at AutoForecast Solutions. And even more will soon follow, including the Acura RSX and Honda’s new 0-Series line. With EV sales plateauing that means fewer sales for the average product, making it hard for manufacturers to recoup product development and manufacturing costs.
Further complicating matters, the Trump tariffs on foreign made auto parts, aluminum and steel are driving up production costs. And the president has signaled plans to add a 50% tariff on imported copper, a key ingredient in every EV. But, if anything, that will drive automakers to try to sell even more battery-electric vehicles, experts believe, even if it means rolling out still more deals in the months ahead.
This story was originally reported by Autoblog on Aug 23, 2025, where it first appeared in the News section. Add Autoblog as a Preferred Source by clicking here.
Comments