If you’ve been considering switching to an electric vehicle, there’s no better time than now. With a $7,500 federal tax credit still in place, combined with record-breaking inventory levels and incredible deals from automakers, EV buyers have an unmatched opportunity to save. However, this window may soon close as significant changes loom on the horizon.
The Federal EV Tax Credit: Act Fast Before It’s Gone
The $7,500 federal tax credit, a major driver of EV affordability, could soon disappear under the incoming administration. President-elect Donald Trump has suggested plans to eliminate the credit, potentially as early as January. Experts warn that the removal could even be retroactive to the beginning of the year.
“I would be very inclined to say yes, it’s going away,” said Ivan Drury, director of insights at Edmunds. The tax credit’s fate is uncertain, but buyers who act quickly are guaranteed to lock in this incentive before it’s too late.
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Whether the credit disappears through early tax reform or a new IRS ruling, the risk of losing $7,500 in savings makes acting now a no-brainer for potential EV buyers.
A Buyer’s Market for EVs: Discounts and Incentives Abound
In addition to the federal tax credit, the current EV market is flooded with inventory, creating a golden opportunity for buyers. Legacy automakers are grappling with slowing demand, leaving dealerships stocked with unsold EVs—many of them from the previous model year.
According to Edmunds, nearly 64% of EVs on dealer lots are last year’s models, compared to just 35% for traditional gas-powered vehicles. To move these vehicles, automakers are offering unprecedented incentives:
- Leasing Deals: Average lease payments for non-Tesla EVs have dropped 40% since early 2023, driven by aggressive financing terms and reduced interest rates.
- Manufacturer Discounts: Increased competition among legacy automakers like GM, Ford, and Stellantis has led to steep price cuts on older EV models.
“If you buy an EV now, you’re not only sure of getting the EV tax credit that might not be there for much longer, you get incentives from automakers that can’t move them,” said Drury. “You’re doubling down. It won’t get any better.”
The Impact of Losing the Federal EV Tax Credit
Without the tax credit, EV demand could decline further, forcing automakers to adjust their production and pricing strategies. This is particularly concerning for legacy automakers like General Motors, Ford, and Stellantis, who are still investing heavily in EV development but haven’t yet turned a profit.
Drury warns that if demand falls, current incentives could also disappear, leaving buyers with fewer discounts in the future. Some states, like California, are considering implementing their own tax credits to offset the loss, but these efforts may take time to materialize.
The auto industry, represented by groups like the Alliance for Automotive Innovation, has urged Congress to preserve the credit, citing its importance in competing with Chinese EV manufacturers and advancing the U.S. transition to electric vehicles. Despite these efforts, the credit’s future remains uncertain.
Tesla’s Advantage and the Market Shift
Interestingly, Tesla CEO Elon Musk has expressed support for ending the tax credit, arguing that it would “only help Tesla.” Without the credit, legacy automakers and smaller EV startups like Rivian could struggle to compete, while Tesla, with its established profitability, may solidify its dominance in the EV market.
What the Future Holds for EV Buyers
Despite the challenges, the EV market continues to expand. Experts like Chris Hopson of S&P Global project that new EV models—upwards of 20 in 2025—will attract fresh buyers. However, the pace of growth may slow if the tax credit disappears.
Hopson predicts automakers could adjust by further lowering prices to offset the lack of federal incentives. “Automakers can play with pricing to adjust for lack of credits,” he said.
Additionally, state-level incentives and new models entering the market could help soften the impact of losing the federal credit.
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Why Waiting Could Cost You
If you’re serious about buying an EV, delaying your purchase could mean missing out on significant savings:
- The $7,500 federal tax credit may vanish soon.
- Automaker incentives on older models are at record highs but may not last as inventories adjust.
- Future EV prices could rise as automakers balance production costs with declining demand.
With looming uncertainty and current incentives creating a perfect storm for savings, there’s no better time to make the switch to electric vehicles.
Don’t wait—take advantage of the deals, lock in your federal tax credit, and join the growing EV revolution today!
