Ford & GM Stretch EV Tax Credit Beyond Expiration with Clever Dealer Programs
Detroit, Michigan – As the federal $7,500 EV tax credit officially expires today, Ford and General Motors are swiftly implementing innovative dealer programs to effectively extend the financial incentives for electric vehicle buyers. This strategic workaround, reported by Reuters, aims to shield EV shoppers from the immediate loss of savings, preventing a potential slowdown in the burgeoning U.S. EV market.
The Workaround: Lease Deals with Built-in Credits
Both automotive giants are leveraging their financing arms to keep the $7,500 incentive alive, at least temporarily. Here’s how the programs function:
- Prepayment by Financing Arms: Ford and GM’s respective financing divisions will make down payments on electric vehicles currently held in dealer inventory.
- Credit Claim: By prepaying, these financing arms themselves qualify to claim the $7,500 federal tax credit.
- Passed-Through Subsidy: Dealers can then lease these pre-subsidized vehicles to consumers. The $7,500 saving is effectively passed through to the customer, resulting in lower lease payments, even though the federal tax credit has technically expired for direct consumer purchases.
Ford’s program is set to provide this buffer until December 31, while GM is coordinating with its vast dealer network to ensure similar EV lease deals continue.
Addressing Market Dependence and Policy Shifts
This proactive move comes amidst widespread speculation that the abrupt cutoff of the federal subsidy could significantly impact the U.S. EV market, creating pressure for both automakers and consumers. The strategy highlights the EV sector’s considerable dependence on government incentives for market growth and the inherent fragility when policy changes are imminent.
Both Ford and GM reportedly consulted with IRS officials to ensure their programs comply with existing regulations, underscoring the legality and careful planning behind this initiative. By maintaining these incentives through lease deals, the automakers are mitigating the immediate risk of buyers shifting back to internal combustion engine (ICE) vehicles, giving the industry a few more crucial months to adjust to the evolving policy landscape. This strategic maneuver demonstrates the industry’s agility in adapting to regulatory changes while striving to maintain EV sales momentum.
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