{"id":391740,"date":"2025-07-30T17:24:18","date_gmt":"2025-07-30T15:24:18","guid":{"rendered":"https:\/\/climatescience.press\/?p=391740"},"modified":"2025-07-30T17:24:27","modified_gmt":"2025-07-30T15:24:27","slug":"ev-update-will-the-market-survive-the-expiration-of-the-federal-tax-credit","status":"publish","type":"post","link":"https:\/\/climatescience.press\/?p=391740","title":{"rendered":"EV Update: Will The Market Survive The Expiration Of The Federal Tax Credit?"},"content":{"rendered":"\n
\"A<\/figure>\n\n\n\n

<\/p>\n\n\n\n

From The Manhattan Contrarian<\/a><\/p>\n\n\n\n

Francis Menton<\/a><\/p>\n\n\n\n

\"A<\/figure>\n\n\n\n

How quickly things change.<\/p>\n\n\n\n

It was barely more than a year ago that climate activists and federal bureaucrats thought they had maneuvered the internal combustion engine (ICE) automobile to the brink of extinction. ICE vehicles had become like dinosaurs, inferior to their new competitors the EVs, and therefore headed for the scrap heap of history. Customers were flocking to the trendy new EVs, which were seeing rapidly rising sales.<\/p>\n\n\n\n

And the all-powerful federal bureaucracy was going to give the final push to put ICE vehicles out of their misery. On June 7, 2024 President Biden\u2019s National Highway Traffic Safety Administration had issued a final rule (\u201cCorporate Average Fuel Economy [CAFE] Standards for Passenger Cars and Light Trucks for Model Years 2027 and Beyond and Fuel Efficiency Standards for Heavy-Duty Pickup Trucks and Vans for Model Years 2030 and Beyond\u201d<\/a>) <\/strong>jacking up mandatory average vehicle mileage to 50+ [mpg] as of 2031, with further increases to follow from there. Since no ICE vehicles bigger than a baby carriage could achieve that mileage, the only path forward for vehicle manufacturers would be rapid conversion to making only EVs. NHTSA\u2019s mileage rule had also quickly followed an equally draconian mandate from EPA, finalized on April 18, 2024 (\u201cMulti-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles\u201d<\/a>) setting strict and declining limits for CO2 emissions that no ICE vehicles would be able to meet by the early 2030s. And meanwhile, 2022\u2019s Inflation Reduction Act had extended a $7500 tax credit<\/a> to buyers of new EVs through December 31, 2032.<\/p>\n\n\n\n

So all the pieces were in place. By some time in the early 2030s, it would be effectively illegal to sell new ICE cars, and they would be rapidly disappearing from the roads.<\/p>\n\n\n\n

Well, not so fast. Suddenly, the rapid advance of the EV may have stalled out completely. The federal regulators have reversed their direction. And customer preferences seemingly favorable to EVs may turn out to evaporate as soon as federal tax benefits end, an event now just a couple of months away.<\/p>\n\n\n\n

NHTSA\u2019s CAFE standards just got eviscerated by the \u201cOne Big Beautiful Bill\u201d Act. Although the standards themselves have not yet been rescinded, the OBBB re-set the enforcement mechanism to have a maximum penalty of zero. This is from a July 8, 2025 memo from the law firm Sidley & Austin<\/a>:<\/p>\n\n\n\n

In one of its many changes, the <\/em>One Big Beautiful Bill Act<\/em><\/strong>, enacted on July 4, 2025, eliminated civil penalties for noncompliance with federal fuel economy standards.  Specifically, Section 40006 of the Act amends the language of the Corporate Average Fuel Economy (CAFE) statute to reset the maximum civil penalty to $0.00.  Although the statute and its <\/em>implementing regulations<\/em><\/strong> otherwise remain in place, this amendment removes any civil penalties for producing passenger cars and light trucks that do not meet fuel economy requirements.<\/em><\/p>\n\n\n\n

As to the EPA-mandated CO2 emissions limits for vehicles, EPA announced on March 12, 2025<\/a> that it was beginning a process of reconsidering the vehicle greenhouse gas emissions rule that had just been adopted less than a year before. Excerpt:<\/p>\n\n\n\n

U.S. Environmental Protection Agency (EPA) Administrator Lee Zeldin announced the agency will reconsider the Model Year 2027 and Later Light-Duty and Medium-Duty Vehicles regulation and Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles. In addition to imposing over $700 billion in regulatory and compliance costs, these rules provided the foundation for the Biden-Harris electric vehicle mandate that takes away Americans\u2019 ability to choose a safe and affordable car for their family and increases the cost of living on all products that trucks deliver.<\/em> <\/p>\n\n\n\n

That one may be in the regulatory grinder for many months, but with little doubt as to what the final result will be, namely full rescission.<\/p>\n\n\n\n

And the $7500 per new vehicle tax credit? After just having been extended to 2032 by the Inflation Reduction Act of 2022, the credit has now been modified by the OBBBA to end as of September 30, 2025. From Kiplinger, July 12:<\/p>\n\n\n\n

With the passage of President Donald Trump\u2019s 2025 tax reform, known as the <\/em>One Big Beautiful Bill<\/em> (OBBB) the federal EV tax credit will expire for vehicles purchased or leased after September 30, 2025. As a result, buyers have only a short window left to take advantage of these federal savings.<\/em><\/p>\n\n\n\n

All of a sudden, EVs and ICE vehicles are set to compete on a completely level playing field, with no mandates or tax credits propping up the EV side of the competition. How will that turn out? It remains to be seen, but data from the first half of the year indicate that the previous rapid increase in EV sales may already be stalling out. In a reversal for a previously rapidly-growing market segment, sales of EVs in the second quarter of 2025 declined significantly from the same period the prior year. From Cox Automotive, July 14, 2025<\/a>:<\/p>\n\n\n\n

[S]ales of new electric vehicles (EVs) in the second quarter of 2025 were lower year over year by 6.3%, in line with the Cox Automotive forecast. A total of 310,839 new EVs were sold in the U.S, down from 331,853 in the same period a year earlier. Sales in Q2 were higher than in Q1 by 4.9%, and total EV sales through the first half of 2025 set a record at 607,089, representing a 1.5% year-over-year increase.<\/em><\/p>\n\n\n\n

Cox continues to predict a spike in EV sales in the third quarter of 2025, in the run-up to the expiration of the tax credit on September 30. However, after that, it is entirely likely that there will be a significant decline. Without the government mandates and subsidies, it\u2019s hard to see EVs expanding much beyond being a niche product used as a second (or third) vehicle by affluent buyers.<\/p>\n\n\n\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

How quickly things change.<\/p>\n

It was barely more than a year ago that climate activists and federal bureaucrats thought they had maneuvered the internal combustion engine (ICE) automobile to the brink of extinction. ICE vehicles had become like dinosaurs, inferior to their new competitors the EVs, and therefore headed for the scrap heap of history. Customers were flocking to the trendy new EVs, which were seeing rapidly rising sales.<\/p>\n","protected":false},"author":121246920,"featured_media":391743,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","_crdt_document":"","advanced_seo_description":"Explore the shifts in the EV market as federal tax credits wane and competition with ICE vehicles intensifies. What's next for buyers?","jetpack_seo_html_title":"EV Market Stalls: Tax Credit Expiration Impacts Sales","jetpack_seo_noindex":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[1],"tags":[691821977,691818295,691836905,691836904],"class_list":{"0":"post-391740","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","6":"hentry","7":"category-uncategorized","8":"tag-electric-vehicles-evs","9":"tag-internal-combustion-engine-ice-vehicles","10":"tag-one-big-beautiful-bill-act","11":"tag-president-bidens-national-highway-traffic-safety-administration","13":"fallback-thumbnail"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/climatescience.press\/wp-content\/uploads\/2025\/07\/0AQNAW6tts86mFWQl28DuIJCAzPypLaRTai7YsCRgj3lROcxUcgJczRN7wML_-zwb7azK3oC8pkpt1ndBy-x6zgCC-3D0u0Pvb-puc2KiKKPIkvFvrVFC6qIk724_Kjnl1kavfyJ_WYWtsCGbQVFXGZQk7sm6YQ-1.jpeg?fit=1280%2C1280&ssl=1","jetpack_likes_enabled":true,"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/paxLW1-1DUo","jetpack-related-posts":[{"id":201212,"url":"https:\/\/climatescience.press\/?p=201212","url_meta":{"origin":391740,"position":0},"title":"Continued 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