EV Tax Credits Set to Expire in September – What Buyers Must Know

(TestMiles) – For many years, federal electric vehicle tax incentives were among the only negotiation tools available in an industry resistant to price reductions. However, a recently enacted federal budget law has now eliminated these benefits. President Trump's "Large and Impressive Act" will terminate electric vehicle and plug-in hybrid tax credits as of September 30, 2025. This means customers have just a short period this summer to take advantage of potential savings—up to $7,500 for new EVs and up to $4,000 for pre-owned ones—before the opportunity disappears entirely from Washington.

Don’t misunderstand: this isn’t just a short break. It represents one of the strongest shifts away from electricity-based policies at the federal level ever seen. If you're looking to buy an electric or plug-in hybrid car, time is running out—and so are your chances to save hundreds.

How does it stack up against competitors?

The main competitor at this moment isn't another vehicle—it's time itself. Approximately 20 models meet the criteria for complete federal benefits, as dictated by complex regulations regarding local production, battery supply chains, and cost limits outlined in the 2022 Inflation Reduction Act. Cars such as the Chevrolet Blazer EV, Equinox EV, Silverado EV, and Tesla Model 3, Y, and Cybertruck remain eligible. The Hyundai IONIQ 5 and IONIQ 9 manage to qualify through leasing arrangements because of an exception within the law that grants tax credits to the lessor instead of the individual purchasing the vehicle.

This rental gap has turned into a popular strategy within the sector. Several models that aren't eligible for tax incentives through outright buying—like internationally manufactured electric vehicles—are still able to receive benefits when rented. However, the issue lies in whether the renting firm transfers these advantages, and not every one does. Therefore, buyers ought to inquire directly prior to finalizing any agreement involving "APR."

For whom is this intended, and who might want to avoid it?

If you've been hesitant about electric vehicles, this summer could be your ideal opportunity to make the switch. New electric cars still carry a high price tag—on average, an EV costs around $63,000, which is roughly $13,000 more than a similar gasoline vehicle. Tax incentives have reduced this difference for several consumers. However, these benefits will disappear in October, forcing budget-minded buyers to either cover the full cost or hold out for manufacturers to reduce their suggested retail prices on their own.

Consumers searching for "budget-friendly" electric vehicles should take extra caution. The Chevrolet Equinox EV, marketed as an electric SUV under $30,000 with rebates, may experience a significant increase in cost later this year. Meanwhile, Slate Auto, a new company offering an EV priced at $19,900, has adjusted its rates to reflect prices in the mid-20s. It comes as no shock. The entry-level affordable EV is quickly disappearing from the market.

On the other hand, purchasers who value performance, comfort, or advanced technology more than affordability might not be concerned. For these individuals, embracing electric vehicles goes beyond financial considerations—it's about the overall experience. However, you shouldn't anticipate those tax incentives coming back anytime soon. The political landscape has changed, and funding from Washington remains unavailable.

What’s the long-term significance?

This shift may reshape the way and speed at which America adopts electric vehicles. As of 2025, electric cars account for 7.3% of all newly sold vehicles in the U.S. This figure had been anticipated to increase gradually due to support from the federal government. However, with the absence of these incentives, the outlook becomes more uncertain.

Car manufacturers such as Ford, General Motors, Hyundai, and Kia have invested billions of dollars into electric vehicle development. Production facilities have been modified, large-scale factories constructed, and dealership staff educated. However, without monetary benefits aimed at attracting customers, particularly those with average incomes, consumer interest might slow down. Moreover, even California's regulations requiring zero emissions may encounter resistance from the incoming government.

The electric vehicle sector isn't falling apart. However, it's losing its safety net, and gravity continues to take effect. With federal funding decreasing, attention turns toward cost, charging facilities, and customer confidence. Put simply, the EV market has now become an authentic marketplace, where consumers will make decisions based on financial calculations without assistance from the government.

If you're thinking about switching to an electric vehicle, act now. Once September 30 passes, the government subsidy will disappear, leaving you to negotiate as before—through cash alone.

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