Carmakers Step in With Incentives as EV Tax Credit Expires

President Trump’s affinity for electric vehicles (EVs) lasted about as long as his government collaboration with Tesla (NASDAQ: TSLA) CEO Elon Musk did. Earlier this year, at a staged media event at the White House’s South Lawn, the president publicly announced that in support of Musk, he was purchasing a red Tesla Model S. But by June, amid their deteriorating relationship, the White House said the president was exploring options to sell or give away the vehicle. 

Shortly thereafter, on July 4, the One Big Beautiful Bill Act (OBBBA) was signed into law, making it clear that the federal government was determined to inhibit the EV industry in the United States. A provision of the OBBBA outlined the end of the federal government’s EV tax credit—which in 2022 had been extended and revised by the Biden administration’s Inflation Reduction Act—as of Sept. 30, 2025. 

The end of the federal incentive dealt a blow to the burgeoning EV market, which had seen U.S. sales grow from around 233,000 units in 2020 to more than 1.5 million units in 2024. But the effort falls short of a death knell, as adoption rates continue to increase despite the administration’s efforts to stifle it. According to Grand View Research, the global EV market is forecast to undergo a compound annual growth rate (CAGR) of 32.5% between 2025 and 2030. And while the Asia Pacific region represents the largest market in the world, the U.S. EV market is expected to grow at the fastest CAGR through the start of the next decade. 

So it’s little surprise that legacy automakers like Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) have found a loophole that allows them to directly offer consumers the same $7,500 incentive that the federal government’s now-expired EV tax credit once did. 

Legacy Automakers Forge Their Own Path Forward… With a Catch

Knowing the EV tax credit’s expiration was looming, Ford and GM took proactive measures in advance of the Sept. 30 deadline that have allowed the two companies to continue offering customers a price break.  

By working within IRS guidelines for clean vehicle tax credits, the financing departments of Ford and GM made down payments on EVs prior to the expiration date. In turn, those savings are allowed to be passed on to buyers for EVs that are either already on dealership lots or were in transit. According to the IRS, those down payments were enough to satisfy the tax credit requirements with the agency. 

However, there’s a catch. Even though it isn’t necessary for consumers to take possession of their EVs prior to the Sept. 30 deadline, because it was necessary for dealerships to have done so, the offer is only available for pre-qualified leased EVs. Separately, there is a $4,000 tax credit available for qualifying used EVs. 

According to Ford Credit, the company’s financing arm, these offers will be available until Dec. 31. Importantly, while this appears to be a stopgap measure, it demonstrates a commitment by the two largest U.S. automakers to transform their product lines of EVs. 

Both Companies Are Heavily Invested in the EV Transition 

While the efforts to extend the tax credit savings to customers may be temporary, both Ford and GM have an eye on the future, and that future is decidedly electric. 

Ford has committed $5 billion to a multi-pronged approach to electrification of its fleet. That involves investments in 4,000 American jobs at the Louisville Assembly Plant and BlueOval Battery Park in Michigan to deliver a new EV pickup and produce advanced prismatic LFP batteries. 

Additionally, the plan entails the Ford Universal EV platform, which aims to produce a family of affordable EVs produced at scale, with over-the-air updates for perpetual vehicle improvement. The first vehicle in that class will be a midsized, four-door electric pickup with a targeted MSRP of around $30,000, which Ford says should reach customers by 2027.

The company is also investing in an improved assembly line—the Ford Universal EV Production System—the goal of which is “radically simplifying vehicle assembly for safety, quality, and speed.” 

For its part, GM is planning on investing $4 billion over the next two years into expanding both its EV conversion and increasing production of its internal combustion engine vehicle line.

That plan includes transitioning its factory in Detroit-Hamtramck—rebranded as Factory ZERO—to 100%.

At that plant, GM will only produce EVs, beginning with the Chevrolet Silverado EV, GMC Sierra EV, Cadillac Escalade IQ, and GMC Hummer EV pickup and SUV. 

What Does That Mean for Investors? 

In the near-term, the two companies’ capex toward the EV transition will have little to negative impacts. Long-term, that picture will very likely look different. But Wall Street is tepid in its analysis, with Ford’s average one-year price target 13% lower than today’s share price, and GM’s average one-year price target just 8% higher than today’s share price.

For investors following the money, GM appears to have an edge with 93% institutional ownership versus Ford’s 58% institutional ownership. Given that GM is now the second largest manufacturer of EVs in the United States with Q2 EV sales up 111% year-over-year, accounting for 16% of the U.S. EV market, the smart money might be on to something. 

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