With the USD 7,500 federal tax credit for EV buyers now expired, automakers are offering significant discounts to keep their electric vehicle (EV) inventories moving.
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Hyundai has introduced a USD 7,500 cash incentive on the 2025 Ioniq 5 and reduced the price of the 2026 model by up to USD 9,800. General Motors and Ford initially devised workarounds to extend the benefits of the tax credit but backtracked following pressure from Republican senators. Both will now offer comparable lease deals at their own expense, while Stellantis has already matched the value of the expired credit with generous incentives.
Several brands, such as Tesla, Chevrolet and Nissan, have introduced more affordable EVs to attract budget-conscious buyers. The second-generation Chevy Bolt starts below USD 30,000, while Tesla’s Model Y and Model 3 are priced around USD 40,000. The fourth quarter will be a transition period, with some brands possibly cutting production, while others show clear intent to remain in the market. “It’s going to be a very diverse response to this,” Jominy said.
Hyundai’s CEO, Randy Parker, emphasised the company’s “committed to being competitive, delivering value and giving customers a seat for every purse.” Analysts predict EV leasing rates may drop as automakers adjust their incentives, potentially raising transaction prices.
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The Trump administration relaxed federal emissions regulations and eliminated the EV tax credit, reducing pressure to increase EV sales. EV incentives peaked at 16 per cent of the transaction price in July but remained above 15 per cent in September, with average EV prices hitting USD 58,124, up over 3 per cent from August but stable compared to last year.
The growing affordability gap challenges EV adoption as the tax credit fades. GM will adapt its EV incentives based on consumer feedback, CEO Mary Barra stated. She said the company’s EV incentives are based on “what the consumer is telling them, what they need, and then the very disciplined approach we have in go-to-market.” In late September, GM and Ford had planned to claim the expired tax credit for cars already on dealership lots, but cancelled those programs in early October. They are now offering equivalent discounts for October.
Without federal subsidies, EV price reductions will depend on whether automakers believe the tax credit will return or if the market stabilises. Sam Fiorani from AutoForecast Solutions highlighted that “These incentives just helped the manufacturers pay for all the investment they did, and having it go away puts them on the line for those investments; they have to figure out another way to pay for them.”
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