TL/DR –
Ford Motor Co. and General Motors (GM) have scrapped plans that would have allowed them to continue offering a $7,500 federal EV tax credit in lease deals following the subsidy’s formal expiration on September 30. Initially, the car manufacturers had planned for their financial arms to make down payments on EVs in dealer inventory before the end of September, so the vehicles would qualify for the $7,500 credit, but the move was criticized by lawmakers. Forecasts predict that the end of the subsidy could result in a 20–30% fall in EV registrations; GM has already taken steps to scale back EV production in anticipation of this reduced demand.
“`html
Ford and GM Reverse Decision to Extend Federal EV Tax Credit
In a significant policy reversal, Ford Motor Co. has announced on October 9 that it will no longer be continuing with its plan to maintain the $7,500 federal EV tax credit for its dealerships embedded in lease deals. This move followed a similar decision by General Motors, which had previously scrapped a similar program, as reported by Reuters.
Ford and GM’s decision signals a retreat from the strategies that were designed to bolster EV demand following the formal end of the subsidy on September 30.
Earlier in September, both Ford and GM had launched undervisibly programs aimed at preserving the benefit of the lease-included credit. The financial arms of these companies would make down payments on EVs in dealership inventories before the September 30 deadline, ensuring the vehicles qualified for the $7,500 credit. These vehicles were to be leased to customers with the credit amount already included in their payments.
The automakers had liaised with IRS officials behind the scenes to ensure their plan met the eligibility rules by demonstrating the acquisition by the deadline through a binding contract and payment. GM had initially planned this approach for around 20,000 vehicles.
However, GM made the first move to withdraw from this plan on October 8, stating that it would internally fund lease incentives through October instead of claiming the credit. The next day, Ford also confirmed it would not proceed with the scheme, though it promised to continue competitive lease pricing through Ford Credit and existing incentives.
This pullback comes in the wake of criticism from lawmakers, specifically Republican Senator Bernie Moreno, a former dealer, who stated that these plans were a circumvention of policy.
Effects on the Supply, Demand, and Sales of EVs
The federal subsidy for new EVs had been a critical driver of EV demand in the U.S. The Inflation Reduction Act of 2022 had widened its reach and allowed consumers to transfer it to dealers at the point of sale.
Its termination is expected to severely weaken demand. According to some predictions, EV registrations could drop by 20-30% in the absence of the subsidy. Even in 2025, automakers were attempting to stimulate pre-buy demand ahead of the cutoff. For instance, Ford had earlier in the year extended a free home charger offer to boost sales.
In light of the expected fall in sales, GM has taken measures to reduce EV production. The company has plans to halt or slow down production at factories manufacturing models such as the Cadillac LYRIQ and Chevy Bolt and to delay the initiation of a second shift on other lines.
For Ford, the termination of the credit will add to the financial strain on its EV business. The company anticipates substantial losses in its EV and software operations in 2025. The elimination of predictable incentives also endangers Ford’s proposed $3 billion battery facility in Marshall, MI, which was partly reliant on favorable policy support.
“`
—
Read More US Economic News