U.S. Federal Electric Vehicle Tax Credits Expire, Impacting Market Dynamics

"...Automakers and investors are about to find out what the "natural demand" is for new all-electric vehicles in the U.S., starting this week...."

"...Many automakers have relied on the incentives to boost consumer demand for EVs, which they've spent billions of dollars developing even as the vehicles remain largely unprofitable...."

"...But that might not happen immediately...."

"...The federal incentives for consumers to purchase electrified vehicles have been in place since 2008, in varying forms...."

"...EV roller coaster..."

"...Once the bill was passed, sales of EVs quickly gained traction, especially as some automakers added even more discounts to move out older models...."

"...Cox Automotive forecasts sales of EVs hit 410,000 during the third quarter, up 21% from a year earlier...."

"...That would easily be the highest amount of EVs ever sold in a quarter in the U.S., as well as a record 10% market share...."

"...Cox expects many buyers pulled ahead plans to purchase an EV before the federal incentives sunset...."

"...The sales increase corresponded with a notable uptick in automaker incentives for EVs, as more buyers who qualified for offers rushed out to buy vehicles...."

"...Cox Automotive reports average incentive spend for EVs was more than $9,000 – more than double the industry average...."

"...What's next?..."

"...While automakers have said they will continue to offer EVs, many companies are already taking steps to prepare for the expected impacts to sales, including laying off workers, cutting production of EVs or eliminating vehicles entirely...."

"...Others such as Volkswagen, Porsche and Rivian Automotive have announced changes to their EV plans or reductions in workforces related to EVs...."

"...But some plans are already too far along to go back on...."

"...New models are coming soon, such as a redesigned Nissan Leaf – arguably the first mainstream EV that was offered in the U.S. back when it was launched in 2010...."

"...Nissan officials at an event touting the new model said the end of the credits timing with the fall release of the new Leaf is "tough," but even without the tax credit, the price of the vehicle — starting at around $30,000 — should attract buyers...."

"...Those kinds of lower priced vehicles are expected to be even more important for EV customers and companies after the elimination of the tax credits, according to Valdez Streaty...."

"..."The arrival of truly affordable models is so critical," she said, citing upcoming EVs from the likes of GM and Ford Motor. "[They] could reshape the market."..."