The EV tax credit in the US expires

First conceived back in 1992, the modern version of the EV tax credit is now going away after the Trump administration axed it. The $7,500 tax credit, part of the Inflation Reduction Act introduced by the Biden administration, will no longer be available starting October 1, 2025.

This will obviously lead to a temporary decline in sales, after the spike of September, as everyone on the verge of a purchase rushed to take advantage of the subsidy.

The market will gradually recover, but there will be pain in the meantime and it's unclear how long that will last. The forecast indicates a 27% decline in sales, which aligns with the sales drop in Germany following the country's discontinuation of its own version of the EV tax credit last year.

In anticipation of the end of the tax credit, consumers rushed to buy EVs during July and August (September data is still not compiled, but it will inevitably be even similar). About 9.9% of the total car sales in August were EVs, which is the highest in US history yet. Consumers purchased 146,332 all-electric cars, representing an 18% year-over-year increase. Even used EVs, which qualify for up to a $4,000 tax credit, were on the rise. They reached an all-time high of 41,000 units.

Many believe that the EV tax credit was a resounding success. Back in 2012, the US set a goal to reach 3% EV market share by 2025, and the country beat all estimates. Last year, 8.1% of all car sales were EVs. That's enough to reach a 54.4 mpg fleetwide average and reduce emissions.

Others argue that automakers will be compelled to reduce prices and optimize battery production. They might stop hiding behind government incentives, and the level playing field will boost competition.