Ford & GM Jump On Loophole To Use $7,500 EV Tax Credit Through End Of 2025 – CleanTechnica

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The big electric vehicle (EV) story at the moment, in the US at least, is the expiring US EV tax credit, which provides up to $7,500 for buyers of new electric vehicles. After September 30, the tax credit is gone. But … maybe just sort of gone for some automakers it turns out.

Let’s just jump to the chase. Here’s the series of key points:

• As long as you have a “binding written contract” and put down an initial payment for an EV by the end of September 30, the IRS has decided that you are eligible to receive the tax credit. (Some of presumed this clarification or change was to help Tesla, which can easily take in orders for new vehicles since it sells directly to customers.)
• Ford and GM, after discussions with the IRS according to Reuters, have decided they’ll buy a bunch of electric vehicles themselves and then sell them to their auto dealers to lease to customers at a discount in coming months.
• Ford and GM are apparently eligible to buy the vehicles and take advantage of the tax credits, as they are separate enough from the dealers, and then the dealers can cut those lease prices thanks to the tax credit and offer the EVs cheaper than they could otherwise to actual consumers.

Is it all a bit convoluted? Yes, but it works. Is it a loophole in the law? Clearly. Do we love it here at CleanTechnica? Definitely!

Now, EV shoppers can at least get great deals on leases in coming months, through December 31, 2025, via Ford Credit, reportedly. And let’s consider some of the big benefits of this as it comes to EVs:

• With a lease, the car won’t be with the initial customer for very long. If it’s a two- or three-year lease, the EV will quite quickly get moved on to the used EV market, which will allow someone else to go electric.
• The initial lessee, however, will get used to the convenience of home and/or workplace EV charging (most likely) and the smooth and quiet drive of an electric car. So, presumably, they will want another EV when their lease is up.
• So, pushing people into leases — even compared to new EV purchases — will probably speed up EV adoption in the United States. Win, win!

It’s not clear if other automakers have also figured out this loophole and will be doing the same thing as Ford and GM are doing. Were Hyundai, Kia, Volkswagen, Volvo, Honda, Toyota, and others in the loop on this? Did they have clever legal and finance teams working to come up with this idea too and confirm its accounting legality with the IRS? We don’t know yet, but I presume we’ll find out soon. I was looking at all of the automakers’ webpages for EVs today, and I did notice that all of them were highlighting the expiring EV tax credit on their websites.

Now, what about Tesla? Tesla doesn’t have separate dealers. So, presumably, Tesla couldn’t take advantage of this loophole. There’s no clear network of dealers who are independent partners to the EV company and can engage in a written binding contract with the company. Unless I’m missing something, it seems that Tesla will lose out here and suffer competitively from the loophole, despite initial reporting seeming to indicate that the change/clarification to the terms of the EV tax credit expiration would benefit Tesla and was perhaps made to benefit Tesla.

Well, sales of EVs should still be a bit better in the 4th quarter for Tesla that it would have been without the change, since it just needs to lock in contracts and down payments with customers before October and those vehicles can be delivered throughout the coming months. However, it seems clear that people shopping for an EV during the next quarter are going to find some great EV leasing deals from Ford and GM, and perhaps no other automakers. Stay tuned as more information comes out on this, though.

Related story: Chevy Blazer EV SS — CleanTechnica Review