How The End Of The US EV Tax Credit Could Supercharge EV Sales

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This is actually a simple one, so I’ll keep it quick. I’m not sure if we’ve ever presented this argument at all, and certainly not as a standalone article. Because it’s a clear sequence of points, I’m going to use a numbered list to get rolling.

1. In the United States, the $7,500 tax credit for purchasing new electric vehicles and the $4,000 tax credit for purchasing used electric vehicles are about to end.
2. That is leading to a surge in EV purchases this quarter.
3. Generally speaking, we expect EV sales to then drop after September 30, because those financial incentives will be gone and people who were thinking of buying an EV soon-ish rushed to buy one before October 1.
4. However, we’ve also argued for years that the benefits of electric vehicles for EV owners and drivers are significant and will naturally lead to more and more people switching from gas-guzzling cars to electric cars they can conveniently charge at their homes and workplaces.
5. So, when this surge of Q2 2025 EV buyers get their electric vehicles, love them, and discover how much better they are than their gas cars ever were, they are going to talk to their friends, family, and coworkers about this. (This happens time after time after time with new EV owners.)
6. As a result, even without the financial subsidies, that wave of new EV owners is going to lead to many more people becoming more aware of EVs, aware of their advantages, and open to getting EVs themselves. That could be a very large portion of the “early majority” that switches from not thinking about or genuinely considering an EV to being intrigued and attracted to going electric (like their friend, family member, or coworker did).
7. Some percentage of those people are going to then go on to buying an electric car.

Perhaps that last part won’t happen quickly. People need some time to let their thoughts simmer and seep in, and need some time to plan such a big purchase. Also, they may feel like they shouldn’t buy an EV right away since that would be conceding that they could have bought one a month or two earlier and gotten a big discount on it — and people often don’t like to admit that they made a mistake, even with the timing of a purchase. However, creating a surge of EV buyers thanks to the ending of two tax credits should eventually lead to a second and third wave of people influenced by them buying EVs as well.

Without that manufactured surge of 2nd quarter 2025 EV buyers, perhaps it would take longer for those next-wave buyers to go electric. The counterargument might be that keeping the tax credit would lead to more EV buyers quarter after quarter, resulting in those word-of-mouth sales coming slightly slower but for a longer period of time and more consistently. I would say I agree with that. However, there is the possibility that the net benefit of accelerating many EV purchases by even a couple of quarters is stronger since those word-of-mouth sales grow faster at a fairly high scale and then snowball and accelerate the transition. I don’t really have a strong opinion either way on this. I’m open minded and, for example, don’t know which would actually lead to us getting to 50% EV sales sooner. Of course, the best of all worlds would be phasing out the subsidies, benefiting from this surge of sales, and then getting a change of power that brings back the tax credits. Some people will disagree that this boom-&-bust-&-boom cycle would be better, and maybe they are right, but I do think this would accelerate adoption the most.

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