The U.S. Internal Revenue Service has given automakers and buyers a reprieve from the looming Sept. 30 deadline to qualify for the $7,500 federal electric vehicle tax credit, allowing customers to sign binding purchase agreements and make a payment now, but take delivery after the end of next month.
The provision will allow customers and dealers to order vehicles that won’t arrive until the fourth quarter but still allows them to qualify for the tax credit. The move will benefit models that have become hard to find for some customers in some regions of the country, such as the Honda Prologue, Hyundai Ioniq 5, Volkswagen ID.4 and others, and models that have had production slowdowns because of supply-chain issues.
"For purposes of sections 25E, 30D, and 45W, a vehicle is 'acquired' as of the date a written binding contract is entered into and a payment has been made. A payment includes a nominal downpayment or a vehicle trade-in," the IRS says. Assuming a buyer checks those boxes, they can then claim the credit once their vehicle is "placed in service," the IRS notes, even if that happens after Sept. 30.
General Motors and Tesla are the automakers who stand to gain the most by the IRS clarification. GM has six BEVs that qualify for the credit and Tesla has four.
Automakers are mostly losing money on each BEV sold. The federal tax subsidy was meant to help build scale during these early days of BEV sales and incentivize consumers to take the plunge on all-electric driving. Without the incentive, according to a recent Bloomberg report, BEV registrations are projected to plunge by 317,000 units, or by 27% in 2026 compared with 2025 volume, based on a study by Joseph Shapiro and Felix Tintelnot, associate professors at the University of California Berkeley and Duke University, respectively.
The end of the tax credits is a move made by the Trump Admin. as part of a broader shrinking of government agencies and spending, as well as targeted cuts in any policy meant to reduce reliance on fossil fuels.
U.S. BEV sales stood at a first-half-record 670,000 units from January-June 2025, per Cox data, up 1.5% vs. H1 2024 deliveries. Buyers flocking to dealers to lock in purchases before the incentive's expiration was seen by industry watchers as a key reason for the increase.
