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Clean Vehicle Credit Expiration: Impact & Implications  

  • Writer: Claire Carpenter
    Claire Carpenter
  • Oct 7
  • 2 min read
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In section 30D of the Inflation Reduction Act of 2022 (IRA), a federal tax credit program known as the Clean Vehicle Credit (CVC) provided benefits to qualifying purchasers of electric vehicles. This program, while built upon existing legislation from 2009, significantly increased incentives for consumers to purchase more eco-friendly cars: offering up to $7,500 and $4,000 for purchases of new and used electric vehicles, respectively. In its original plan, the IRA would provide these benefits for 10 years. However, in the recently passed ‘Big Beautiful Bill’, this tax break has been cut short, ending all federal credits for electric vehicles on September 30th, 2025. 


Since its implementation, the CVC has served its purpose to increase sales of electric vehicles; a study from the Argonne National Laboratory found that yearly new EV sales were up almost 15% and used EV sales jumped an astonishing 60% by 2025. Supplementing this growth, the ‘Big Beautiful Bill’ passed on July 4, 2025 caused consumers to flock to their local dealerships, rushing to claim their credits before the incentives were washed away in the Trump Administration’s plan to scrub any expenses deemed unnecessary out of the federal budget. This influx in consumer demand for electric vehicles both underscores the CVC’s impact on consumption and foreshadows the future of the market for eco-friendly transportation options. 


Amidst this rush, Tesla, the top electric-vehicle manufacturer in the US, set a new sales record in their third quarter– an especially surprising feat, considering the sales slump they’ve been in since the spring. Hitting 497,099 cars sold in their third quarterly tally of 2025, Tesla shocked both previously discouraged shareholders and skeptical market analysts. Though admirable, this spike in sales was likely due to the increase in consumer demand and is unsustainable as consumer incentives expire. Ford, another large supplier of electric vehicles in the United States, isn’t optimistic about the future of EV sales. CEO Jim Farley says he “wouldn’t be surprised if EV sales in the U.S. go down to 5%”, referencing the EV market share, which currently sits around 10-12%. Farley’s prediction for the economic success of electric vehicles sparks a question: was the increase in electric vehicle sales in recent years solely due to the tax breaks offered via the CVC, or is it because of the moral alignment of eco-friendly consumers? 


The future of technologically-forward and environmentally-friendly cars still remains to be seen. What holds true, however, is that the Clean Vehicle Credit’s expiration will have economic implications for all suppliers of electric vehicles. Without the guarantee of federal tax credits and incentives, the true elasticity of electric vehicles will be revealed in coming months, setting the stage for the future of sustainable transportation.



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