Tax credits for electric cars are no more. What’s next for the US EV industry?

The recent termination of federal tax credits for electric vehicle (EV) purchases has created a significant shift in the U.S. automotive market, the full impact of which is still being assessed. Industry experts are closely observing the situation to gauge what lies ahead for both consumers and manufacturers. According to Stephanie Valdez Streaty, director of industry insights at Cox Automotive, the removal of these incentives could lead to reduced consumer interest in EVs. However, the imminent launch of numerous new and revamped models may provide a much-needed boost to sales. "I think the dust needs to settle for everyone to figure out what’s going to happen in the near term," she stated, highlighting a period of adjustment for the market. Until October 1, buyers could benefit from a tax credit of up to $7,500 for qualifying new electric vehicles and $3,000 for used ones, alongside a similar incentive for leases. These benefits were eliminated following the enactment of the One Big Beautiful Bill Act, which aimed to reverse various clean energy initiatives as part of a broader tax reform strategy. In the lead-up to the credit's expiration, EV sales witnessed a notable surge as consumers rushed to capitalize on the available incentives. With the credits now off the table, a downturn in sales is expected for the remainder of the year. Nevertheless, automakers are implementing strategies to mitigate the potential fallout. Both Ford and General Motors have committed to maintaining a $7,500 credit on leases, as their finance divisions acquired vehicles before the credits were discontinued, allowing them to extend these savings to customers. Additionally, Hyundai is stepping into the fray with a promotion offering significant discounts on its 2026 Ioniq 5, with price reductions reaching up to $9,800, effectively compensating for the lost tax credit and then some. As the market adapts to these changes, the resilience of the EV sector will be tested in the coming months.