The federal EV tax credit is getting pulled. The One Big Beautiful Bill Act passed both chambers and was signed into law July 4, 2025. That means the $7,500 credit for new electric vehicles and the $4,000 credit for used ones will vanish after September 30. No extensions. No phase-outs. Just gone.
Buyers who want the credit must have the car in hand by the deadline. That’s not delivery scheduled. That’s keys in hand, title transferred, and VIN registered. Automakers are already scrambling. Tesla, which sold 64,051 Model Y units in Q1 2025, is expected to see a surge in demand this quarter. The Model Y starts at $44,990. With the credit, it drops to $37,490. That’s a $7,500 swing. Multiply that by tens of thousands of buyers and you get a stampede.
Used EVs are also in play. The $4,000 credit applies to vehicles priced under $25,000 and at least two years old. That includes older Bolts, Leafs, and Model 3s. Carvana and CarMax are sitting on roughly 140,000 EVs nationwide. Dealers are warning of inventory wipeouts. Plug In America called it “the summer of the EV.” They’re not wrong. This is the last quarter where federal subsidies make EVs competitive with gas-powered cars.
The average new EV price in May was $57,700. Gas cars averaged $48,100. That’s a $9,600 gap. The credit narrows it. Without it, EVs lose their edge. Used EVs averaged $36,000, compared to $34,000 for used gas cars. Again, the credit helps close that gap. But only until September 30.
Tesla’s ZEV credit revenue stream also takes a hit. In 2024, Tesla made $2.76 billion selling Zero Emission Vehicle credits to other automakers. The BBB Act guts that market. California’s ZEV mandates were stripped. EPA waivers revoked. States can’t enforce stricter emissions rules. That means no more mandatory ZEV purchases. Tesla loses leverage. Other automakers lose cover.
The bill also ends the $7,500 commercial EV credit and the $1,000 home charger credit. Those expire June 30, 2026 and December 31, 2025 respectively. But the consumer credits are the big ones. They’re the ones that moved units. They’re the ones that made EVs viable for middle-income buyers.
Expect chaos. Expect price hikes. Expect dealer markups. Tesla’s affordable models might soften the blow, but they’re not here yet. The clock’s ticking. September 30 is the wall.
Sources:
https://evxl.co/2025/07/03/trump-big-beautiful-bill-ends-7500-ev-credit/
https://www.teslarati.com/how-tesla-could-benefit-from-the-big-beautiful-bill-axes-ev-subsidies/
https://arstechnica.com/cars/2025/07/gop-wants-ev-tax-credit-gone-it-would-be-a-disaster-for-tesla/
https://www.bankrate.com/taxes/electric-vehicle-ev-tax-credit-breaks-under-trump-big-beautiful-bill/
https://www.kiplinger.com/taxes/whats-happening-with-the-ev-tax-credit
https://insideevs.com/news/764531/ev-tax-credit-ending-september/