Senate Proposes Accelerating End of EV Tax Credit: Impact on Automakers and Consumers

The Senate Finance Committee has proposed eliminating the $7,500 electric vehicle (EV) tax credit and removing a carve-out for some automakers, which would change the effective date to 180 days after the bill's passage. This move is taking a harder line than the House bill passed on May 22 in eliminating Biden-era incentives for EVs. The House bill had originally proposed ending the consumer EV tax credit at the end of 2025, but would have extended the credit to the end of 2026 for automakers that had not manufactured 200,000 qualifying vehicles for sale in the U.S. The Senate text would ostensibly move up the timeline, with changes going into effect 180 days after the bill's passage rather than Dec. 31, 2025, and without the carve-out. If the Senate text moves forward as written and accelerates the timeline for the end of the credit, some buyers may move quickly to purchase EVs. "In that short term, you might see an EV spike that settles down, and you might get some pull ahead sales," said Stephanie Brinley, an associate director of research and analysis at S&P Global Mobility. "I think on a longer term basis, that'll kind of even out." The end of the carve-out for manufacturers that have produced a relatively small number of EVs would impact startups such as Lucid and Rivian, as well as traditional automakers such as Honda that have been slow to produce EVs. "Leaving that carve-out in would make a difference for some automakers," Brinley said. Senate Republicans also propose an immediate end to the $7,500 credit for leased EVs that do not qualify for the purchasing credit. Leased vehicles currently qualify without restrictions on content or assembly location, but if they meet strict assembly, battery and critical minerals rules, they would still get a tax credit for 180 days after passage. The proposal would also end a $4,000 used-vehicle EV tax credit after 90 days. The proposal is working against a self-imposed July 4 deadline on the budget bill and still requires an additional reconciliation step and must be signed by President Donald Trump into law. The Trump administration has taken steps to roll back federal emissions standards and withhold funding for a nationwide charging network, and has also eliminated the waiver that allows California to write strict emissions standards. That waiver has driven EV adoption in California and other participating states. In conclusion, while the Senate proposal to end the EV tax credit may cause a short-term spike in EV purchases, it is likely to even out in the long run. The impact on startups and traditional automakers that have been slow to produce EVs will be significant, and the proposal also includes an immediate end to leased EV tax credits and a used-vehicle EV tax credit that ends after 90 days. The proposal is still working against a tight deadline and must be signed by President Trump into law.