End of Federal EV Tax Credit: Future Challenges for the US Automotive Industry

Federal Tax Credit: The federal tax credit for eligible electric vehicles in the United States ended in September 2025, raising significant questions about the trajectory of the American electric vehicle industry. This financial incentive offered a discount of up to $7,500 on domestically manufactured electric vehicles. This credit was primarily introduced to accelerate the market for electric vehicles, support efforts to combat climate change, and counter the advancement of China as a global leader in producing competitively priced electric vehicles.

The Political Context and its Impact on the Future of Credits

Complex Political Landscape: The end of this credit comes in a complex political context, as Donald Trump's second administration has shown a tough stance towards renewable energy initiatives. The issue of electric vehicles has become a point of political contention, with Trump exploiting it as a symbol of "government overreach" and launching repeated attacks against it.

Climate Change: It is worth noting that he previously described climate change as a "hoax" during his speech to the United Nations General Assembly. These changes came after EV tax credits were a core part of the Inflation Reduction Act enacted by the Biden administration. (Source: Business Insider, September 4, 2025)

Economic Challenges and Supply Chains

Significant Challenges: With the elimination of this crucial tax credit, the American electric vehicle industry faces significant challenges. Manufacturing and purchasing costs for electric vehicles remain high.

Supply Chains: Furthermore, the industry's supply chains are heavily reliant on China, making them increasingly vulnerable to the effects of tariffs and the escalating trade war. This situation could lead to a slowdown in the adoption of electric vehicles in the United States, unless alternative solutions emerge. (Source: MIT Technology Review, October 2, 2025)

Market Response and Competition Requirements

Consumer Sensitivity: Currently, consumers show greater sensitivity to electric vehicle prices and associated modern technologies, a trend that differs from the behavior of the first generation of buyers who rushed to acquire Tesla cars in recent years.

Market Stimulation: To regain buyer confidence and stimulate the market, the American automotive industry must produce electric vehicles at more competitive prices, similar to what China offers. Achieving this goal requires fundamental innovations in manufacturing processes, improved supply chains, and the development of technologies used, a process that demands considerable time and effort.