Ford drops $7,500 EV lease credit as subsidy ends

Ford Motor, a Michigan-based automobile manufacturer, has withdrawn an initiative that allowed dealers to offer a $7,500 tax credit on electric vehicle (EV) leases. The automaker made this decision after the government subsidy ended on September 30.

In a statement dated October 9, Ford’s representative mentioned that the company’s focus is not on claiming the EV tax credit but on maintaining the competitive lease payments in the market.

Ford’s decision is similar to that of General Motors (GM), an automotive manufacturing company, which the company arrived at on Wednesday, October 8. While automakers such as Hyundai and Stellantis offer cash incentives to help buyers, Ford and GM have chosen a different approach.

Ford copies GM in cancelling the tax credit program

Ford’s financing divisions had developed a strategic plan to purchase EVs from their dealers’ stock. Afterwards, they would submit an application for the $7,500 credit for those vehicles and utilize the funds to adjust lease terms for their clients.

Following its decision to cancel the program, Ford’s spokesperson emphasized that Ford Credit continues to offer 0% financing for 72 months. Apart from Ford Credit, the representative pointed out that the company also offers other incentives.

General Motors’ decision to halt a similar program was reportedly influenced by concerns raised by U.S. Senator and former car dealer Bernie Moreno of Ohio. Ford, however, has not publicly detailed the reasons behind its cancellation.

In the meantime, reports from reliable sources noted that the two automakers established their strategies after consulting officials from the Internal Revenue Service (IRS).

The EV sales continue to spark heated debates among automotive executives, as some, like Ford CEO Jim Farley, warn that the electric vehicle market could drastically drop without the credit. In contrast, others, like the CEO of Hyundai Motor North America, believe that this market is stronger than that.

Moreno expresses delight in GM’s decision on the federal tax credit

Towards the end of September, GM devised a plan for its in-house lending division to purchase EVs from its dealers. At this time, car manufacturers intend to apply for the $7,500 federal tax credit on those cars and then use the funds to assist their clients with EV lease agreements until the end of the year. 

Later, after several considerations, including Moreno’s concerns, GM ended the program. The company said, “After thinking it over, we have chosen not to pursue the tax credit,” without providing additional details about their choice. 

Following GM’s decision, Moreno expressed that he was pleased with the automaker’s decision to drop the EV tax-credit plan during an interview with reporters. He highlighted that the EV subsidies ended on September 30, and he believes that all other car manufacturers will follow GM’s lead.

“I am looking forward to partnering with GM as we implement several policies to support our domestic auto industry,” he added.

The federal tax credit program aimed to assist dealers in navigating the end of the tax credit, as they were concerned about being left with unsold EVs that might be difficult to market. GM intended to apply for credit for tens of thousands of EVs that dealers had retained, a source with knowledge of the situation said.

Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.