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According to car analysts, consumers are racing to buy electric vehicles before a quick succession deadline.
From September 30th onwards, Republicans defended on Capitol Hill, eliminating the tax credit signed by President Donald Trump in July.
The Biden-era Inflation Reduction Act originally provided tax cuts to consumers until 2032.
“We expect it to be in the third quarter [a] “We’ve been working hard to get the most out of our business,” said Stephanie Valdez Streaty, senior analyst at Cox Automotive.
“People are in a hurry,” she said.
“A significant amount” for EV sales
According to Cox Automotive Data, consumers purchased nearly 130,100 new EVs in July. The July figures represent a 26.4% increase from June, a nearly 20% increase from the previous year, Streaty said.
According to Cox, the share of EV sales in July recorded approximately 9.1% of total passenger car sales that month.
“We’re seeing a significant amount of it in new EVs,” said Liz Najman, director of market insights at EV marketplace and data provider Recurrent.
Meanwhile, nearly 36,700 used EVs were on sale in July, showing data from Cox, which is the monthly high.
Certain EV models — Chevrolet Equinox EV, Honda Prologue and Hyundai Ioikoku 5 — also saw record-breaking sales last month, Nyman said.
Najman said 8,500 EVS sold in July were on sale in July, selling in July, with all models other than Tesla in total of the highest EVs in the US.
(This is because Tesla’s sales have declined for the second consecutive quarter, down 12% in the second quarter from the previous year and 9% in the first quarter.)
A $7,500 tax credit brings EVs closer to price parity
Tax credits are worth up to $7,500 for new EVs and $4,000 for used EVs – aim to make EV purchases more financially attractive to consumers.
The EV tax credit was one of many policies that the Biden administration adopted to try to reduce US greenhouse gas emissions. The transportation sector is the largest source of US greenhouse gas emissions.
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According to the Massachusetts Institute of Technology, EVs are “clearly better” for the environment than traditional cars with internal combustion engines.
However, while EVs tend to be cheaper than the lifecycle of car ownership compared to traditional gasoline vehicles, they generally carry higher upfront costs, analysts said.
According to COX data, the average trading price for all new passenger cars in July (apart from battery electric vehicles) was $48,078.
Cox said the new EVS averaged $55,689, before dealer incentives and tax credits. If your purchase qualifies for the full $7,500 tax credit, the price difference is approximately $48,189.
S&P Global analyst Tom Libby wrote in July that the price gap between EVs and gasoline vehicles “no longer exists,” Tom Libby wrote. The disappearance of federal tax credits “puts a risk” price competitiveness, he wrote.
The state and utility could provide additional financial incentives for EVs, depending on where the consumer lives, analysts said.
EV Dealers Increase Incentives
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Dealers are also trying to take advantage of the upcoming September 30 deadline, depriving consumers of urgency to drive sales, analysts said.
“The $7,500 federal tax credit ends” was bold lettering at the top of Tesla’s homepage early on Friday. “Limited stock – Deliver now,” the automaker wrote below.
September 30th is the date (essentially driving) that consumers must acquire ownership of a car to qualify for the EV tax credit.
Beyond tax credits, dealers also offer relatively generous financial benefits to seduce consumers.
They offered an additional financial incentive of around $9,800 on average to new EV buyers in July, equivalent to about 17.5% of the average trading price, Cox data shows.
That share is the highest percentage until October 2017, before the “new era of EV adoption,” when monthly sales were very low, Streaty said.
EV sales are likely to “collapse” in the fourth quarter of 2025 as tax credits expire and the market adapts to new financial reality, she said.
The used EV is likely to be a bright spot in the short term, analysts said.
Growth is accelerating, and most buyers today are already not eligible for a $4,000 tax cut.
“[A]Cox Automotive wrote last month that a third of used EVs that are eligible for incentive anyway wrote:
