Senate bill pushes to scrap EV tax credits by September as Trump-Musk fallout continues

The popular federal tax credits that have helped Americans switch to electric cars could be unplugged much sooner than anyone expected. A new proposal in the US Senate plans to eliminate the financial perks for buying new and used electric vehicles as early as this fall.

For the last couple of years, the government has offered a helping hand to those looking to purchase an EV. A credit of up to $7,500 has been available for new electric cars, and buyers of used models could receive up to $4,000. These incentives were designed to make cleaner transportation more affordable, and were originally supposed to last until 2032. Under the latest version of the budget bill being debated by lawmakers, these credits could vanish for vehicles acquired after September 30, 2025.

The push to accelerate the phase-out is part of President Donald Trump's proposed "One Big Beautiful Bill Act." While an earlier version passed by the House of Representatives suggested ending the credits within 180 days of the bill becoming law, the Senate's revision puts the expiration date on a much faster track. If the legislation passes with this timeline, the cost of an electric vehicle will effectively jump by thousands of dollars overnight for many consumers.

The National Automobile Dealers Association (NADA) has raised alarms about the change, pointing to a significant inventory of unsold electric vehicles. According to the association, dealers currently have approximately 140,000 EVs on their lots.

NADA has urged Congress to consider a more gradual transition period to avoid disrupting the market and leaving dealers with a surplus of vehicles that suddenly became more expensive for their customers. The bill does offer a potential olive branch to automakers by proposing to eliminate penalties for failing to meet federal fuel economy targets.

The future of EV incentives drama has reignited a high-profile political battle between President Trump and Tesla CEO Elon Musk. Musk, who had previously supported the President, has become a vocal critic of the budget bill. He argues that while he is not opposed to ending EV subsidies, the bill should also eliminate long-standing subsidies for the fossil fuel industry to create a level playing field.

Musk has taken to social media to attack the legislation, claiming it will harm American jobs and industries of the future. He has gone as far as to threaten to financially support primary challengers against any Republican senators who vote in favor of the bill.

President Trump has fired back, pointing out on his Truth Social platform that Musk's companies, like Tesla, rely heavily on government support. The public spat has quickly resulted in real-world consequences, with Tesla's stock taking a dive following the President's comments.

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