Ford and General Motors (GM) are reportedly developing a strategy to mitigate potential declines in electric vehicle (EV) sales due to the expiration of the $7,500 federal EV tax credit on September 30. Both automakers are collaborating with dealerships on short-term initiatives that would allow customers to maintain access to this tax credit on leased EVs until the end of the year.
Documents reviewed by Reuters and discussions with dealers reveal that the programs will be administered through each company’s financing division. The process involves Ford and GM purchasing EVs from their dealerships by having their financing arms make down payments on all electric models in stock before the tax credit lapses. Subsequently, the dealers will lease the vehicles to customers with the tax credit effectively incorporated into the lease price.
This approach aims to cushion the impact on consumers and support the upward sales trends many dealerships have witnessed recently. EV sales surged in July and August as customers sought to secure the credit prior to its expiration, but experts warn that sales are expected to decline sharply once the incentive is no longer available.
A Ford representative stated that the company is focused on providing competitive lease payments for electric vehicle shoppers through Ford Credit until the end of the year. Meanwhile, GM did not provide immediate commentary on the matter.
Prior to launching this initiative, Ford and GM consulted with officials from the Internal Revenue Service (IRS). The IRS had previously indicated that vehicles must be purchased by September 30 to qualify for the tax credit.
However, there are financial risks for both automakers if EVs remain unsold. It remains uncertain whether either company will extend the discount leasing program beyond the current timeframe. Notably, the Ford F-150 Lightning is the only eligible EV in Ford’s lineup for the tax credit, while GM offers various models, including the Chevy Equinox, Blazer, Silverado, as well as the Cadillac Lyriq, Optiq, Vistiq, and GMC Sierra EV.
Source: https://www.theverge.com/news/789855/ford-and-gm-are-buying-their-own-evs-to-keep-the-7500-tax-credit-alive