The recent passage of the massive tax and spending cut bill has significant implications for the electric vehicle (EV) market. As of September 30, the federal tax credits for electric car purchases will end, potentially altering the landscape of the automotive industry.
Dealership owners across the country, including those in the Chicago area, are preparing for the changes. John Crane, who runs Hawk Auto Group, noted that the $7,500 incentive is a substantial portion of the vehicle’s price, often around 20%. With the credit’s expiration, Crane expects a significant shift in consumer behavior. “The barrier to entry is going to be higher, and less people will be willing to take a chance,” he said.
The impact is already being felt, with some manufacturers reassessing their EV production plans. “Nissan has pushed out production for some of their electric vehicles,” Crane mentioned. Even high-end brands like Maserati are reevaluating their all-electric plans. According to Crane, nearly all automakers are pushing back their new EV entrants to adjust to the changing market dynamics.
John Truckenbrod, founder of Chicago-based EV Energy Group, offers a broader perspective. While the end of the tax credit may slow down EV purchases in the U.S., global interest in electric vehicles remains strong. “Globally this year, one out of four cars sold will be electric,” Truckenbrod stated. He believes the market will continue, albeit potentially at a slower pace.
For consumers shopping for electric vehicles, the end of the tax credit means potentially higher prices and fewer available cars on dealership lots. Crane explained that if prices rise, sales are expected to drop. As a result, dealerships like Hawk Auto Group may shift to an order-based system for electric vehicles.
The federal tax credits are set to expire on September 30, not at the end of the year, making the third quarter a critical period for EV sales. As the industry adjusts to this change, both manufacturers and consumers will need to adapt to the new market reality.
