EarthTalk - Will the end of the $7,500 electric vehicle tax credit slow the transition to EVs?
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Dear EarthTalk:
Will Trump's killing of the $7,500 electric vehicle tax credit significantly slow the transition to EVs? Are carmakers adjusting their plans in favor of gas cars now?
Paul Jones, New York, NY
On October 1st, 2025, the Trump administration ended the $7,500 federal tax credit for EV buyers. The tax credit was originally enacted in 2022 by the Biden administration to encourage the purchase of EVs and support sustainable transportation nationwide. The credit was a key incentive for consumers to adopt EVs. Its recent expiration comes with a larger tax and spending budget to reduce government spending and boost U.S. oil production. The intention of the Trump cuts was to save billions of dollars in the long run and to pressure carmakers to move production to the United States, creating increased jobs.
The loss of the credit poses some consequences for buyers and manufacturers alike. It is likely that it will decrease demand for EVs. According to a recent CNN story, this means that “prices in real terms will immediately rise.” The story also emphasizes that many consumers rushed to buy EVs while the credits still lasted in August and September. This could result in many people choosing not to buy EVs and, in turn, decreasing sales in the last three months of 2025.
As EVs are far more costly than gas cars, the likely outcome of the cuts is that many will be unable to afford the switch. The impact is expected to be so dire that analysts who originally forecasted EVs to take up some 48 percent of the U.S. market share by 2030 have now downgraded predictions to 37 percent.
Many carmakers have begun actively responding to the recent policy changes. It is expected that many will either have to scale back or cancel new EV models. Stephanie Valdez Streaty, director of industry insights at Cox Automotive, told CNBC in July 2025 that the EV tax credit cuts are like “the training wheels are being taken off” of a nascent technology. “Those training wheels have helped balance and support EV adoption,” she added.
Electric vehicles are more climate sustainable than gasoline cars. The shift to EVs has been key to promoting climate consciousness and decreasing the amount of greenhouse gas emissions in the atmosphere. As customers stick with gasoline cars, air quality levels and the environment hang in the balance.
CONTACTS
- What's the 'natural demand' for EVs in the U.S.? We're about to find out, https://www.cnbc.com/2025/09/29/electric-vehicles-ev-demand-federal-incentives-tax-credit.html
- Yes, Trump's Policies Are Hurting The EV Transition, https://cleantechnica.com/2025/08/11/yes-trumps-policies-are-hurting-the-ev-transition-automaker-statements/.
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