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As of yesterday, the Trump administration’s overhaul of electric vehicle (EV) incentives has taken effect, ending the $7,500 federal rebate for EV buyers in the U.S.
Trump’s “drill, baby, drill” approach to climate policy has resulted in a dramatic reversal of the EV incentives originally introduced by the Biden administration, which were originally intended to run through 2032. The new “Big Beautiful Bill” eliminates both the $7,500 credit for new EVs and the $4,000 credit for used models.
Biden’s tax credit aimed to make EVs more affordable by lowering upfront costs and narrowing the price gap between electric and gas-powered vehicles. Those incentives expired at midnight on September 30.
Unsurprisingly, EV sales spiked in the weeks leading up to the deadline. In fact, August 2025 saw more new EV purchases than any other month in U.S. history. Despite this surge, analysts expect sales to crest and then decline in the wake of the rollback.
The American EV market was already under pressure, grappling with Trump-era tariffs that disrupted supply chains and mounting competition from Chinese automakers. These challenges have left the domestic industry struggling to ever really get in gear.
The removal of federal tax credits is expected to deepen uncertainty. Some manufacturers are already scaling back production. Honda, for example, has announced it will discontinue its Acura ZDX electric crossover.
Others are adjusting strategies rather than retreating. Ford CEO Jim Farley remarked,
“I think it’s going to be a vibrant industry, but it’s going to be smaller- way smaller than we thought.”
Still, there are glimmers of optimism at the state level. Several states are considering or have pledged their own EV incentives, suggesting that support for electrification, much like EV regulation, will continue in a patchwork fashion across the country.
Margo Oge, former director of the EPA’s Office of Transportation and Air Quality, emphasized the broader stakes, stating:
“It’s not just about climate change, but our country’s competitiveness. Our domestic industry has to continue to innovate for the long-term survival of the industry.”
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