EV Makers Are Covering the Cost of the Dead Tax Credit Themselves

Electric vehicles have long struggled to match the convenience of gas-powered cars, and their higher price tags have made the switch tough for many households. Even with heavy investment from automakers, sales have lagged, pushing manufacturers to offer their own incentives to move inventory.

S. government helped close that gap. The Obama-era tax credit gave up to $7,500 off a new EV, depending on battery size and price, with a 200,000-vehicle cap per manufacturer. In 2022, the Biden administration removed that cap but required final assembly in North America to qualify.

That changed in September 2025, when the Trump administration scrapped the credit entirely to cut government spending.

The end of the credit sparked a buying rush. 5%. But that spike didn't last. 8%.

Without the federal aid, the average price gap between a new EV and a gas car sat near $15,000. So automakers stepped in. By February 2026, Cox Automotive reported the EV premium had dropped to $6,532, the lowest ever, thanks to cashback offers and 0% APR financing. For example, the 2026 Lucid Gravity comes with $10,000 cashback or a 72-month 0% deal, and the Hyundai Ioniq 9 offers a similar $10,000 rebate.

These incentives rose nearly 14% from January 2025 to February 2026.

That strategy is hurting the used market. Used EVs now cost only about $1,334 more than used gas cars, reflecting faster depreciation. Why buy a nearly-new EV when a discounted new one costs the same? Automakers are swallowing these costs, which isn't sustainable. The hope is that production costs will drop over time, but a return of the tax credit under a future government remains possible.

For now, the industry is paying the price.