For car buyers interested in electric vehicles, the clock is ticking to take advantage of federal tax credits on new and used EVs before they expire on Sept. 30.
Introduced in 2022 under the Inflation Reduction Act signed, the federal tax credits — $7,500 for new and $4,000 for used — are being phased out due to President Trump’s One Big Beautiful Bill Act, which is also ending a series of other clean energy credits over the next several months.
With just one week to go until the expiration date of the Biden-era EV credit, customers are flocking to dealerships to cash in. EV sales reached a record high in August, with new EV sales up 17.7% year over year and used EV sales up 59% for the same period, data from Cox Automotive shows.
“As we approach the sunset of the IRA tax credit, we expect September to mirror August’s elevated sales activity, driven by time-sensitive purchase and lease offers,” Cox Automotive said in its report.
The findings jibe with data from Cars Commerce — whose holdings include Cars.com — that shows a 33% surge in EV demand since last year as shoppers rush to take advantage of the credits. The automotive tech company also found that used EVs are on dealers’ lots for 46 days on average, a nearly 30% decrease from last last year that indicates the sector of the EV market is rising in popularity.
Deals to be had
Anxious to clear out EV inventory before the arrival of new models in November, dealerships have been offering their own incentives, such as monthly lease rates that are are as little as 1% of the car’s sticker price.
“I’m getting an electric vehicle now; it’s because of this tax credit,” said Hynes.
A chart below from Cars.com shows which vehicles are still eligible for the federal tax credit, based on information from Environmental Protection Agency.
What will happen after the tax credit ends?
“It is the concern,” Horvick said. “It could be challenging.”
But not all experts believe the expiration of the tax credit will have a huge effect on future EV sales, and that’s simply because sales were low to begin with.
Electric vehicles make up about 7% of new car sales, according to Anderson Economic Group. A recent analysis from Kelley Blue Book shows EV sales in August accounted for a record 9.9% of total car sales, up from 9.1% in July.
