WASHINGTON / DETROIT — America’s electric vehicle (EV) ambitions are facing a reality check. The federal $7,500 EV tax credit expired on September 30, ending a key incentive that had fueled sales and investment across the auto industry.
The Trump administration’s decision to let the program lapse is part of its broader rollback of clean-energy subsidies. Industry leaders warn the shift could slow adoption and weaken U.S. competitiveness in the global EV market.
GM drops lease workaround
General Motors confirmed on October 8 that it abandoned a plan to capture remaining tax credits through dealer leases after criticism from lawmakers and legal experts. The company’s finance arm had planned to buy EVs from dealer inventory before the deadline, claim the credits, and pass savings on to customers.
Tesla raises lease prices and trims costs
Following the loss of the tax credit, Tesla raised U.S. lease rates for all models. Monthly payments for the Model Y now range from $529 to $599, and the Model 3 from $429 to $759, according to Reuters.
To maintain affordability, Tesla launched new “Standard” versions of both vehicles with fewer features and shorter range. Analysts say the move shows how deeply the tax credit had shaped EV pricing.
Honda halts Acura EV as demand weakens
Honda Motor Co. has discontinued its Acura ZDX electric crossover, built at GM’s Spring Hill, Tennessee plant. The company cited low demand and plans to shift to its in-house RSX EV platform by 2026.
Meanwhile, the U.S. Department of Energy is reviewing more than $1.1 billion in grants previously awarded to GMand Stellantis for EV production. If rescinded, the funding cuts could delay major plant expansions.
States continue to push forward
While federal support ends, several states are expanding their own incentive programs. California, New York, and Connecticut continue to promote EV adoption. Connecticut recently raised its CHEAPR rebate to as much as $4,000 for new battery EVs.
Globally, China’s BYD and Europe’s Volkswagen Group are increasing output with strong policy backing, further pressuring U.S. automakers.
The road ahead
Analysts expect EV sales in the U.S. to decline in 2026 before stabilizing later in the decade. Automakers are turning to hybrids and plug-in hybrids to balance costs and consumer demand.
Without federal incentives, the U.S. auto industry faces a slower, costlier journey toward electrification while global competitors continue to accelerate.
