EV tax credit to expire September 30

SAN RAFAEL, Calif. - In a major hit to the auto industry, the Trump administration's so-called ‘Big Beautiful Bill’ is killing the $7,500 federal tax credit on purchases of electric vehicles at the end of the month. 

For potential buyers, it's a one-two punch with the loss of a big tax credit plus a big tariff to boot. And for those who already own them, the EV stickers won't let drivers in the carpool lane. 

After Sept. 30, drivers in California must have enough people in their car to use the carpool lane, or they could get a nearly $500 ticket.

The Clean Air Vehicle carpool stickers were an incentive to get people to buy clean air vehicles. Hybrids and electric cars with one driver have been allowed to to use the carpool lanes since 2001. That also meant reduced tolls for those drivers. Caltrans says the Bay Area has some of the highest number of decal registrations in the state.

Even though Gov. Gavin Newsom tried to extend the program through 2027, the federal government is ending it.

Tax credit helped EVs go mainstream

What we know:

Auto Broker Rich Gasaway, owner of McCoy Auto Brokers in San Rafael, says the $7,500 federal EV tax credit did a lot to help mainstream electric cars. 

"It finally came to a point where EVs, they pencil out to where they're significantly cheaper than a gas car is for the consumer, both in the monthly payment and the cost to charge or fuel the car," said Gasaway.

Picking up the cost

Losing the credit will shock every monthly payment on a three-year lease. 

"That is approximately $250 in a monthly payment that after the end of this month, the consumer is gonna have to pick up," said Gasaway.

With less than a week left? 

"Definitely a rush in the last week or two to find cars, secure cars for people. Dealers a running low on inventory," said the auto broker.

Potential customers like Donna Juntunen say this: "If I was in the market for an electric vehicle, yeah, I would jump on it because I do think there's some wonderful benefits to it. I just cannot handle the inconvenience of waiting to get it charged." 

Laura Camargo said she is interested in an EV. 

"I think we need to move away from fossil fuels," she said. "But definitely, if there was a timeline like that, it would prompt me to act sooner." 

What's next:

But what of EVs after Sept. 30? 

"It might be a sort of flattening out of growth. For the long term, I think we're going to see less product introductions. Some automakers have already actually canceled EVs that they had previously announced," said Professor Stephanie Weber, a University of Colorado Economist.

A consortium of professors from multiple universities calculated that the loss of the credit will reduce EV sales by 27%. 

Diminished demand

Carmakers must act soon to resuscitate the market. 

With diminished demand, they can slow production, completely shut down assembly lines or plants, reduce prices by cutting their profits, offer all manner of attractive rebates or incentives, such as zero interest rates or some or all of the above. 

"I think in the long run, there's still going to be an interest and manufacturers will finally see that, you know what, people still do want to drive an electric vehicle as opposed to a fossil," said Camargo.

Add the tax credit loss to added new tariffs, $900 to $2,200 per car for Subarus.