Ford and GM's Attempt to Extend EV Tax Credits Just Hit a Major Roadblock
Andrew J. Hawkins, a transportation editor with over a decade of experience covering electric vehicles, public transport, and aviation, reports a surprising development in the auto industry’s effort to keep EV incentives alive.
Just last week, news broke that Ford and General Motors were collaborating with their dealer networks on temporary programs designed to let customers continue benefiting from the federal EV tax credit for leased electric vehicles throughout the end of the year. Since this tax credit officially expired on September 30th, both automakers aimed to maintain this financial perk briefly to boost demand for their electric vehicle sales.
Ford and GM Tried a Novel Strategy
Unlike other automakers such as Hyundai and Stellantis, who have simply offered direct cash rebates to buyers to cover the gap after the tax credit's end, Ford and GM pursued a more creative approach. Their plan involved the automakers’ own finance arms purchasing EVs from their dealership inventories, effectively fronting the down payments on all electric models before the tax credits expired. The dealers would then lease these vehicles to customers with the full $7,500 tax credit discount already factored into the lease price, allowing buyers to enjoy the financial benefit despite the official deadline.
But Here’s Where It Gets Controversial...
This clever workaround faced immediate pushback. General Motors was the first to abandon the plan on Wednesday, with Ford following suit shortly after, according to Reuters. The decision came after Republican Senators Bernie Moreno of Ohio and John Barrasso of Wyoming alerted the Treasury Department, labeling the automakers’ scheme as "a loophole" and accusing them of blatantly undermining Congress’s original intent. The senators’ strong language called out these practices as "nefarious" moves designed to exploit the system.
Interestingly, despite the backlash, Ford and GM had initially received approval for their plan from the Internal Revenue Service, adding another layer to this unfolding dispute.
What Does This Mean for Shoppers and the EV Market?
For customers, the failed plan means they will no longer be able to take advantage of the tax credit for leased EVs after September 30th, potentially making electric vehicles less affordable in the short term. Dealers had recently been reporting a surge in electric vehicle sales through July and August as buyers rushed to claim the tax credit before it expired. Experts now predict that with the credit officially gone, we could see a significant drop in EV sales moving forward.
A Question of Policy and Fairness
This situation raises important questions about how automakers and lawmakers should balance incentives and regulation. Should companies be allowed to engineer financial workarounds like this, or does it undermine the intent of tax policies meant to encourage clean energy adoption? Is it fair for lawmakers to intervene and shut down such strategies, or should the market find its own solutions?
What do you think? Was Ford and GM's plan a clever way to support customers, or did it cross a line? Share your thoughts below and let’s discuss this polarizing issue.
