Ford, GM Buy Their Own EVs to Save $7500 Tax Credit
▼ Summary
– Ford and GM are implementing short-term programs through their financing arms to maintain the $7,500 EV tax credit on leased vehicles through year-end after it expires.
– The automakers will purchase EVs from dealers using their finance divisions, then lease them to customers with the tax credit applied as a discount.
– This strategy aims to sustain recent EV sales momentum and prevent a predicted sales drop once the tax credit ends on September 30th.
– Ford and GM consulted with the IRS before launching the program, ensuring compliance with tax credit eligibility requirements.
– The automakers face financial risks from unsold EVs, and Ford’s F-150 Lightning and several GM models were eligible for the credit.
Ford and General Motors have devised a strategic workaround to preserve the $7,500 federal electric vehicle tax credit for consumers, even after its official expiration date. According to a recent report, the automakers are collaborating with dealerships on temporary leasing initiatives that ensure customers can still benefit from the substantial incentive through the remainder of the year.
The plan operates through each company’s financing division. Ford Credit and GM Financial will essentially purchase electric vehicles from their own dealer inventories before the tax credit deadline passes. Following this internal transaction, dealers will then lease those vehicles to customers, applying a full $7,500 discount directly to the lease terms. This maneuver effectively transfers the value of the expiring federal credit directly to the consumer.
This creative strategy aims to maintain sales momentum and shield car buyers from a sudden price increase. Electric vehicle sales experienced a significant surge during July and August as shoppers raced to secure the credit before its scheduled September 30th expiration. Industry analysts widely anticipate a sharp decline in EV sales once the financial incentive disappears.
A Ford spokesperson confirmed the company is actively working to provide competitive lease payments on its electric models through Ford Credit until the end of December. The program is designed to keep their EVs accessible to a broader range of customers during this transitional period.
Both automotive giants reportedly consulted with the Internal Revenue Service to ensure their novel approach complied with regulations before moving forward. The IRS had previously clarified that vehicles must be purchased by the September deadline to qualify for the credit, a condition this leasing program cleverly navigates.
Naturally, the strategy is not without its financial hazards. Ford and GM will assume ownership of any electric vehicles that remain unsold, potentially resulting in a notable financial impact for the companies. It remains uncertain whether either automaker will choose to extend these special leasing discounts beyond the current year.
Ford’s eligible lineup for this program was limited, with the F-150 Lightning being the sole model qualifying for the original tax credit. In contrast, General Motors had a wider array of qualifying vehicles, including popular models like the Chevrolet Equinox EV, Blazer EV, and Silverado EV, alongside the Cadillac Lyriq, Optiq, and Vistiq, and the GMC Sierra EV.
(Source: The Verge)
