Electric Car Incentives In The US End Soon, Global Automotive Industry At Road Intersection

Tesla's electric vehicle complete line. (Doc. Tesla)

JAKARTA - The era of electric vehicle incentives (EV) in the United States is coming to an end. The US Congress, on Thursday, July 3 local time, officially passed a tax and budget law ending a tax credit of US$7,500 for purchases or leases of new electric cars, as well as US$400 for used electric vehicles, effective from September 30, 2025.

This decision marks a major turning point in vehicle electrification travel in the US, which has been heavily dependent on government support through subsidies to accelerate the adoption of environmentally friendly vehicles.

Launching from Reuters, since its enactment in 2008 with a production limit per manufacturer, this incentive scheme was expanded in 2022 to include rental cars and remove the number limit per producer. These incentives have proven to be the main driver of the EV sales spike in recent years.

However, the move to stop this subsidy immediately sparked concerns from various parties. The Electrification Coalition, an electric vehicle advocacy group, sees this policy as a step back.

"When EVs dominate the global market, it is clear that the future of transportation is electricity. This bill actually leaves America's main role to China," they wrote in an official statement.

Interestingly, on the other hand, this new law also provides concessions for conventional car manufacturers. Fines for non-compliance with the standard fuel efficiency of the Corporate Average Fuel Economy (CAFE) are now being removed. This means that manufacturers can more freely build gasoline-fueled vehicles, a signal that can open up space for their focus return to conventional cars.

Automotive analyst from Barclays, Dan Levy, expects a spike in EV sales in the near future. This phenomenon, which he calls a "pre-purchase", was triggered by consumers' desire to take advantage of incentives before they were officially lifted. However, he also warned, after that there would be a sharp decline in sales.

"This bill shows that EV penetration in the US will slow down, because 'wortel' (incentives) and 'sticks' (strict regulations) are now both reduced," Levy wrote in his research notes.

Meanwhile, a study from Harvard University released in March estimated that the end of this incentive could cut EV adoption by 6 percent by 2030, although it is expected to save the government's budget of up to 169 billion US dollars in tax credit for 10 years.

Previously, a number of large producers had to spend money due to failing to meet fuel efficiency standards. Stellantis, Chrysler's parent, paid $190.7 million in civil fines for 2019 and 2020, having previously paid nearly 400 million US dollars in 2016'2019. General Motors was also fined 128.2 million US dollars for violations in 2016 and 2017.

In the midst of this controversy, there are also interesting points in the final bill: Congress canceled its planned USD 250 annual levy for EV owners originally intended to fund road repairs. In addition, the obligation of US Post Service to sell EV-based shipping fleets was also canceled.

This decision sparked a sharp debate: Will stopping this incentive slow the transition to electric vehicles and benefit conventional automakers, or will it be a catalyst for self-innovation in the EV industry?

Estimated Global Impact Of The Elimination Of EV Incentives In The United States

The United States' policy to end its electric vehicle tax incentives as of September 30, 2025, has not only had a domestic impact but also has the potential to have a significant impact globally, given the US position as one of the largest and most influential automotive markets in the world.

As a pioneer in the clean energy transition, the US step back could reduce the global momentum of electric vehicle adoption. Other countries, especially those considering similar policies, could hesitate to maintain or expand their EV incentives.