Could Be A Huge Surge In US EV Sales In Rest Of 2025, And Then Big Crash

So, reportedly, the plan for how Republicans will kill the $7,500 tax credit for electric vehicles is this: 180 days after the budget bill is passed into law, the EV tax credit will go away. Additionally, the tax credit for leased EVs will be eliminated immediately for cars produced outside of the United States. Furthermore, there’s the less talked about but very helpful $4,000 tax credit for used electric vehicles — that will end 90 days after the bill is signed into law.

Obviously, starting in 2026, this is going to be a huge blow to the US EV market. Electric car sales are going to take a hit. But the hit will look much more dramatic for the reason we’re all familiar with by now. Many people who have been thinking about buying an electric car will rush to buy one before the tax incentives end. However, that “pull-forward demand” will also mean fewer people purchase an electric car in the 6–12 months following the subsidy expirations.

So, we will most likely see a surge in EV sales in the rest of this year — perhaps making the market and certain brands look healthier than they are — and then we will see a horrible collapse of the market that will make the market look even worse than it is.

Overall, though, long term, this is not good for the US EV market, and we are going to lag and drag our feet far behind markets like China, Europe, and even apparently some South American countries. Aside from the obvious drop from the removed incentives, it’s also just a big hit to business in the US to provide production tax credits and then pull them after a couple of years. Factories take a lot of long-term planning and capital investment. Throwing that work and investment into the trash will make companies question whether to take a risk in the States again. The US is becoming a less predictable, less stable, less trustworthy market for businesses with these coming changes, especially in the EV and solar power sectors.

Of course, the bill is not passed yet, so things can still change. But it’s not looking good, especially since the Republican-controlled House and the Republican-controlled Senate have both proposed killing the EV incentives. There are only slight variations in how they propose doing so.