Ford and GM’s EV Tax Credit Extension Plan Fails
▼ Summary
– Ford and GM are abandoning their plan to continue offering the $7,500 EV tax credit to customers through the end of the year, as reported by Reuters.
– The automakers had intended to buy EVs from their dealers and lease them with the discount to maintain sales momentum after the credit’s September 30th expiration.
– This approach differed from other companies like Hyundai and Stellantis, which used cash incentives instead of dealer-based leasing arrangements.
– GM and Ford canceled the plan after Republican senators criticized it as a loophole and violation of congressional intent, despite IRS approval.
– Experts predict EV sales will likely decline now that the tax credit has expired, following a spike in July and August as buyers rushed to claim it.
Major American automakers Ford and General Motors have abandoned their strategy to extend the $7,500 electric vehicle tax credit for customers beyond its official expiration date. This development follows a report from Reuters indicating both companies have ceased efforts to implement a temporary leasing program designed to maintain the financial incentive through the remainder of the year.
Initially, Ford and GM collaborated with their dealer networks on a unique workaround. As the federal tax credit was set to conclude on September 30th, the automakers planned for their respective finance divisions to purchase electric vehicles from dealer inventories before the deadline. This maneuver would have allowed dealers to subsequently lease those EVs to consumers with the full $7,500 credit effectively applied as a price reduction, thereby keeping the discount available for a limited time.
This approach differed significantly from the tactics of competitors like Hyundai and Stellantis, who chose to offer direct cash incentives to buyers facing the loss of the federal credit. The Ford and GM strategy, however, was ultimately scrapped. General Motors was the first to withdraw from the plan on Wednesday, with Ford following suit shortly after.
The initiative faced significant political opposition, which contributed to its demise. Republican Senators Bernie Moreno of Ohio and John Barrasso of Wyoming brought the scheme to the attention of the Treasury Department. They publicly criticized it, labeling the tactic a “loophole” and accusing the automakers of a “total violation of Congressional intent.” It is noteworthy that, according to Reuters, both companies had previously received clearance for their plan from the Internal Revenue Service.
The automakers’ goal was to cushion the financial impact on potential car buyers and sustain the sales momentum that many dealers had experienced in recent months. EV sales saw a notable surge in July and August as consumers rushed to secure the expiring tax credit. Industry experts now anticipate a sharp decline in electric vehicle sales following the official end of the incentive program.
(Source: The Verge)
