It’s the first of October, which means the electric-vehicle tax credit is officially dead, having passed away in the wee hours of the morning. Speaking of “morning”, we, and more than a few auto companies, are mourning its death.
It’s no secret that the EV tax credit was a boon to the industry. That $7,500 credit helped a lot of buyers afford EVs, whether it was via a purchase incentive done right at the point of sale or placed into a lease. We’re already starting to understand the fallout of what this will mean for the EV industry as a whole. And the chief of one big American automaker says it’s already putting a damper on his plans.
Welcome back to Critical Materials, your one-stop shop for the biggest news in the EV world. Today, we’re focusing on early reactions to the EV tax credit’s impact, and what it will mean for consumers now that it’s dead. Let’s hop right in, folks.
30%: Ford Says Expect EV Market To Halve
Photo by: Ford
Man, EV companies can’t catch a break, huh? For a long time, the U.S. EV market was heavily reliant on Tesla for a lot of reasons; the cars themselves were kind of the only game in town that was worth a damn to the average consumer.
Range, price and general usability hit all of the sweet spots with consumers, especially with the (relatively) reasonably priced Model 3 and Model Y. Add in the tax credit, and things were good for Tesla.
And now that other automakers are finally starting to catch up, they’ve been cut off at the knees. The tax credit was a large incentive for American car buyers, and now it’s gone. According to reporting from Fortune, Ford CEO Jim Farley said that the death of the EV tax credit could cut the industry in half:
Ford CEO Jim Farley, speaking at the Ford Pro Accelerate summit in Detroit on Tuesday, said he sees a huge impact from the policy change.
While he still sees EVs being a “vibrant industry” going forward, it’s also “going to be smaller, way smaller than we thought.” He called the end of the $7,500 consumer incentive a game-changer and said he wouldn’t be surprised if EV sales in the U.S. go down to 5% of the industry from the current level of roughly 10% to 12%. The most recent forecast from J.D. Power and GlobalData estimated that EVs would account for 12.2% of new-vehicle sales in September 2025.
Farley reminded the audience that he always says, “The customers are pesky. They surprise you.” And what he’s learned is that “customers are not interested in a $75,000 electric vehicle. They find them interesting. They’re fast. They’re efficient. You don’t go to the gas station. But they’re expensive.”
This feels like a complete no-brainer. Until relatively recently, EV efforts from most companies that aren’t Tesla have been aimed at the upper-class buyer. And a $75,000 car, no matter if it’s electric or not, is a hard sell in today’s world, where buyers feel incredibly squeezed by an increased cost of living.
Ford is leaning into cheaper offerings. It’s on the brink of introducing a $30,000 EV truck, built on a brand-new platform using a reinvented version of the assembly line.
Fortune said that Farley still sees electrification in general as the way forward for the U.S. market, even if that future leans more on hybrids than pure EVs.
“Partial electrification is more interesting to customers than we thought…we think hybrid, EV plug-in, E-revs, those kind of partial electric solutions, America is going to fall in love with, or already is falling in love with.” And they’re falling out of love with pure-play EVs, he implied.
The end of the tax credit isn’t great news for the EV market, not to mention the supply chain that has been building up to support what everyone thought would be a boom time in American auto manufacturing. The world will continue to go electric, so let’s hope this is temporary.
60%: Tesla Has Already Updated Its Lease Pricing
Photo by: Patrick George
While automakers and local dealerships are scrambling to update their incentives and sales pricing, there’s no slacking at Tesla. Initially spotted by Reuters and confirmed by us, Tesla has already changed its lease pricing on its new EV models:
Tesla and its rivals had been passing these credits on to customers through competitive lease offers.
The monthly lease of the electric vehicle manufacturer’s best-selling Model Y increased to a range between $529 and $599, from a range of $479 to $529. Prices of all vehicles, however, remain unchanged. Model 3 lease prices touched a range of $429 to $759 per month, from a range of $349 to $699.
Demand for battery-powered models is already showing signs of a slowdown after rapid growth earlier in the decade. Sales could drop after the credits dry up, auto executives and analysts have warned.
These prices don’t seem like too much of a stretch. A jump from $349 to $429 for the Tesla Model 3 isn’t insignificant, especially for buyers on a budget, but this still feels competitive with similarly priced premium internal-combustion sedans.
Purchase prices for the cars haven’t changed.
90%: Tax Credit Claims Weren’t Always Lease-Only
Photo by: Mack Hogan/InsideEVs
The EV tax credit really helped with leasing in particular. Not long ago, before the credit died entirely, new legislation reconfigured the policy so it would only apply to new purchases of cars made in North America.
But those restrictions didn’t apply to vehicles owned by commercial entities, creating a clever loophole for leases. Leasing companies could claim the credit and pass it on to lessees, bringing down the initial cost and monthly payment. Thus, you’d think that most, if not all, EV purchases would be leased, right?
Well, no. According to data from Experian (and reported on by Automotive News), the popularity of leasing depended heavily on which electric model you’re talking about:
The Tesla Model Y was the top-selling electric vehicle in the second quarter of 2025 but only 30 percent of those sales were for leases, according to Experian. About half of all Model Y customers financed their purchase with a loan.
In contrast, the Chevrolet Equinox EV was the third-most-popular EV in the quarter, and 60 percent of those purchases were leases.
Other models quoted, like the Model 3, Hyundai Ioniq 5, and Ford Mustang Mach-E, hovered around a 60%-ish lease rate. And in some ways this makes sense: The Model Y, for example, qualified for a credit when purchased, while the Mach-E didn’t.
Interestingly, Automotive News says that on average, EV leases were $175 cheaper per month than EV loans.
100%: Is The Death Of The EV Tax Credit Overblown?
Photo by: Kevin Williams/InsideEVs
The federal incentives to both buy and build zero-emission cars are mostly gone for now, but the U.S. hasn’t quite reached price parity en masse for EVs and combustion cars. It seems like we were getting close, but the little bit of assistance to get us over the line is now totally gone.
And yet the world continues to electrify. I’m not going to assert that the tax credit did nothing. But in a world where people shop for cars primarily based on their monthly payments, did those deals help as much as, say, a cheaper EV in general?
Cars like the new Nissan Leaf, Slate’s truck or Ford’s upcoming pickup may be a test of how much the tax credit actually helped.
What do you think? Let us know in the comments.
