EV Makers Hit Hard as U.S. Tax Credits End Sept. 30

According to reports, U.S. President Donald Trump's heavily promoted "Big,  Beautiful Bill" is set to be signed into law on Friday, July 4, signaling the end of key federal tax incentives for electric vehicles (EVs).

The U.S. Congress passed a sweeping tax and budget package on Thursday, which will bring the $7,500 tax credit for the purchase or lease of new electric vehicles, as well as the $4,000 credit for used EVs, to a close on September 30.

Originally introduced in 2008, the EV tax credit offered up to $7,500 per vehicle and was gradually phased out as manufacturers exceeded the 200,000-vehicle threshold. In 2022, the Biden administration expanded eligibility to include leased vehicles and removed manufacturer limits.

While this legislative shift poses a significant challenge for electric vehicle makers, traditional automakers are expected to benefit substantially. The “Big and Beautiful” Act eliminates penalties for failing to meet Corporate Average Fuel Economy (CAFE) standards, making it easier to manufacture gasoline-powered vehicles.

J.P. Morgan estimates that ending EV tax credits could cost Tesla approximately $1.2 billion in annual revenue, equivalent to 17% of its projected 2024 earnings. Tesla shares dipped slightly on Thursday and have declined nearly 10% since the beginning of last week.

A Harvard University study published in March predicts that eliminating these incentives will reduce EV adoption rates by 6 percentage points by 2030, while saving the U.S. government $169 billion in fiscal spending over the next decade.

In response, the Electrification Coalition—a prominent EV advocacy group—issued a statement Thursday warning that the U.S. is ceding leadership in the global transition to electric transportation. "As EVs continue to capture more global market share, it's clear that the future of transportation is electric," the group stated, criticizing the new law for undermining progress.

Barclays automotive analyst Dan Levy noted that the upcoming phase-out of the tax credits within three months is likely to trigger a short-term surge in EV sales due to a rush of early purchases, followed by a sharp decline in demand later this year.