The clock is ticking for electric vehicle buyers in America. As part of a massive tax and spending overhaul passed by Congress on July 3, 2025 – also known as the “Big, Beautiful Bill” – the long-standing federal tax credits for EVs will officially be terminated on September 30, 2025. That gives EV buyers just two more months to take advantage of up to $7,500 for qualified new EVs such as the Chevrolet Equinox EV (or $4,000 for used models) – savings that, for many, make EV ownership remotely attainable.
Originally introduced through President Biden’s Inflation Reduction Act in 2022, the federal tax credit program, which was supposed to be in effect until 2032, was designed to bridge the cost gap between gas-powered cars and EV alternatives, with a plan that runs through until 2032. According to the latest data, EVs still average around $9,000 more than gas vehicles, and used EVs about $2,000 more, CNBC reports. The credits helped offset that, especially for middle-income buyers.
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Killed By The “Big Beautiful Bill”
With this move, the federal government is pulling the plug early, citing rising program costs – more than $200 billion over ten years – and redirecting that money to fund a new $4.5 trillion tax cut package from 2025 to 2034. House Speaker Mike Johnson led the charge to kill the EV tax credit in May, opposed by 38 House Republicans who expressed support for keeping the credits.
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Tesla CEO Elon Musk, whose company benefited early and heavily from EV subsidies, has repeatedly called for the end of all government incentives, including those for EVs, oil, and gas. Ironically, Tesla’s own Model Y, the best-selling EV in the world, could become significantly more expensive after the credit ends. The automaker introduced a marginally cheaper variant of the Model Y in May, priced at $44,990 before federal tax incentives.
EV Adoption Is Expected To Slow Down Further
It’s important to note that not all EVs in the US qualify for the tax credits. Only a number of nameplates are included in the list, for which eligibility was determined by price, segment, source of battery components, and final assembly location, though automakers used the incentive as leverage to sell more EVs to Americans. Without the incentive and with some of the EV mandates being culled, it’s expected that the EV adoption will slow significantly.
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Of note, over 1.3 million EVs were sold in 2024, reflecting a 7.3% increase in the number of units sold in 2023, but in 2025, EV growth has slowed down significantly compared to previous years. The EV segment accounts for 8.1% of the total US vehicle market. We’ll see if the upcoming removal of federal tax credits will affect this year’s numbers even further, but we won’t be surprised if it does. In the near-term, however, EV sales may see a sharp increase as buyers who might have been holding out for whatever reason rush to cash in on the tax credit before it’s too late.
Source: CNBC
