5 interesting ways EV buyers are responding to the end of federal tax credits

Summary

EV tax credits ending in September causing rush
Rise in used EV market activity, buyers shift focus
Switch to brands still eligible for tax credit, lease incentives offer savings

The signing of the “One Big Beautiful Bill Act” carries a lot of weight for automakers, and one of the biggest results of the bill’s passing is the end of the federal tax credit that is awarded to buyers of electric vehicles. Come September 30, the new EV tax credit of $7,500 and a used EV tax credit of $4,000 or 30 percent of the entire vehicle’s price (whichever was less) will cease to exist, and EV owners and buyers alike are all responding differently, despite companies like Tesla introducing new incentives to buy fresh models.

Whether it’s by taking advantage of an inventory-cleaning sweeper of a deal or leaving one popular brand for another less established one, buyers are making their feelings known with their most powerful tool — their wallets.

4 car companies spending big bucks on solid-state EV batteries

These four manufacturers are spending huge amounts of money predicting that solid-state EV batteries are the future.

5

Q3 EV sales are expected to soar

The surge before the fall

For those keeping up with the EV market, Q2 saw sales dip a bit for titans of the space like Tesla, who’s seen a 21 percent drop this year alone. However, they weren’t alone. Overall, EV sales slowed a bit in Q2, but if there’s any inventory left on dealer lots, there’s a good chance that it will be gone by the end of Q3. With the federal tax credit set to end in September, buyers are rushing through the doors to take advantage of the credit on name brands like Tesla before it expires. Official numbers haven’t been released yet, but senior analyst at Cox Automotive Stephanie Valdez Streaty probably put it best.

“With government-backed incentives set to end in September and economic pressures mounting, the second half of the year will be a critical test of EV demand,” said Streaty. “Q3 will likely be a record, followed by a collapse in Q4, as the electric vehicle market adjusts to its new reality.”

The incentives on leased EVs will also come to a halt on September 30, closing the popular loophole of listing EVs as commercial vehicles.

Tesla Cybertruck sales have already resulted in a financing slash due to the mass number of recalls and issues, but if the brand’s flagship models lose their momentum in the race, the EV boom that we’ve all been told is coming for the past few years may turn out to be more of an EV blunder when the dust settles.

A dark grey 2024 Tesla Model 3 drives along a Pacific coast highway.

Tesla just announced several last-ditch incentives to boost sales before it’s too late

Tesla is trying to increase sales before the $7,500 federal tax credit expires soon, and other automakers are following suit.

4

Rise in used EV market activity

Buyers who were saving for new EVs are now spending on used options

Rivian

Remember when you saved up for something when you were little? For me, it was a new Nintendo Wii. I see them all the time now on Facebook Marketplace and laugh a little, but do you know what else there’s an abundance of now on just about every used marketplace site? Electric vehicles. The past few years, every manufacturer has rushed to make their own brand of EVs, which are now, subsequently, hitting the used EV market at a rapid pace as owners scramble for new models (see point one). There are currently 70 total EV models available on the market, according to Recurrent, and this could be argued as a bit of a market maturation, with could being the operative word there.

If a new EV was on your to-purchase list in late 2025, you might want to act now instead of later and go used.

In reality, though, that probably isn’t the whole truth. Just like I saved for my Nintendo Wii, many people who were saving for a big EV purchase now realize that time is running out. If a new EV was on your to-purchase list in late 2025, you might want to act now instead of later and go used.

Tesla Model Y in front of a bay on a cloudy day.

Here’s how much a 3-year-old Tesla Model Y is worth today

The new Model Y is here, but a used one might be a smarter buy.

3

Switching from Tesla to brands who still get the tax credit

Not all EVs are created equal

There may be some confusion about this point, and I’m here to put it to bed. All Tesla models still qualify for the tax credit, but some trims do not. Without making you sit through an economics lecture, the price for an EV SUV to claim the tax credit has to be under $80,000, while an EV sedan or car must be under $55,000. The full list can be found on the U.S. Treasury Department website, but just know that there are some higher-tier trims that either only qualify for a partial tax credit or even none at all.

This has caused a bit of a trickle-down effect for brands who offer EVs at lower prices with the same features as Tesla, Lucid or BMW. Particularly, General Motors had a successful Q2 of sales, and are expecting an even bigger jump in Q3 than most companies, even with the added purchases around the tax credit deadline. In that same vein, brands like Kia or Hyundai, despite its recent recalls, are also expecting a bump in Q3 EV sales greater than that of Tesla and other luxury EV brands that may not qualify for the credit.

HUDWAY heads up display in a Ford Fusion.

5 gadgets I use to make my old car feel like a 2025 model

Stuck in that old beater, or just waiting for the payoff? These five gadgets can bring any old car up to speed for 2025.

2

Leasing increases to keep some incentives

Hang on to those credits for as long as you can

Lucid

One of the loopholes to the previous point is to lease a more luxurious EV rather than buy it outright, and this is the fourth way that some buyers and dealers are skirting around maintaining the EV tax credits without having the customer actually purchase the vehicle. When leasing a vehicle, the tight rules on EV ownership are loosened a bit, as the leasing company, which is usually just the finance arm of the automaker itself, are legally considered the owners of the vehicle. This is yet another popular leasing loophole that buyers and dealers alike have used to move inventory and boost numbers over the past few years. Buyers can miss out on the tax credit for a myriad of reasons, including personal income or even the place where the car is manufactured.

Then, the automaker passes that $7,500 worth of savings on to the customer through lower lease payments, essentially making sure that the customer gets the same tax credit. Of course, many drivers are re-upping their leases before September hits in order to keep their tax credits. So, if you didn’t know about this loophole before, now you do, and I consider that a win for everyone involved.

10 most reliable electric cars under $30,000

There’s no need to worry about buying a used EV. Here are ten affordable options with strong reliability scores.

1

Demand spikes for plug-in hybrids

Welcome to the cool kid club, PHEV owners

2026Toyota RAV4 PHEV GR Sporf front three quorters-4

As a middle ground, the plug-in hybrid market is expected to reach new heights with EV tax credits ending, and the switch might have already begun. Plug-in hybrid EV sales have been steadily climbing in the past two years, reaching over 320,000 in 2024 alone. At this rate, with a boom expected in late 2025, sales numbers could realistically reach the 500,000 mark this year alone with manufacturers across the board bringing impressive models to market, like the new Toyota RAV4 PHEV.

The concept of the EV isn’t dying. In fact, it has more money and investment power behind it than ever before. However, that buyer boom that the entire industry has been waiting for might find itself dead in the water, and EV companies will be left to duke it out with the titans of the industry just like everyone else.