EV Tax Credits Are Dying. Here's Why I'm Still Optimistic

🌟 Editor's Note

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This Week’s Big Charge

🛻 BMW Levels Up As Chinese Automakers Surge In Europe

Guten morgen! I’m on my way back from Munich, where I joined BMW to get a preview of its Neue Klasse (New Class) EV platform and the new BMW iX3. 

BMW has actually done very well in the electric race so far. But the iX3 and the future EVs on that platform are meant to turn up the heat: next-generation batteries, faster charging, better software and even better performance. My impressions are coming to InsideEVs and its YouTube channel in a few weeks.

A few years ago, we would’ve called this thing a “Tesla-fighter.” But things are different now.

Just look at the attendee list for September’s International Motor Show Germany, aka IAA Munich, where this BMW will debut. China’s Aito, BYD, CATL, Dongfeng, GAC, XPeng and more will have a presence at Europe's largest auto show.

They’re taking up more space on European roads lately, too:

• 65,808 Chinese cars were registered in Europe in May, representing 5.9% of total sales. Not a lot—but twice what it was last year. [JATO Dynamics]

• In Norway, EVs make up almost 90% of new car sales. And Chinese EV brands now make up to 10% of that market. [CNBC]

• Chinese plug-in hybrids are surging even more in Europe, as they aren’t subject to anti-EV tariffs. [Rho Motion]

Forget Tesla. This is what BMW is up against now. I’ve heard through the grapevine that BMW benchmarked the Neue Klasse against some of China’s EVs, and I get why.

I was blown away by some of those cars when I drove them in Shanghai earlier this year. BMW and the rest have no choice but to bring their A-game now as Chinese brands slowly but surely gain steam on their home turf. If anything is moving the EV revolution along in Europe now, it’s that.

But how’s that going in America? Well…

🇺🇸 The end of EV and green energy tax credits is coming.

Back home, we’re staring down the various green energy credits created by the Inflation Reduction Act of 2022. That will have a profound effect on the car market for years to come.

The EV tax credits were designed to get people driving cleaner cars, while making sure those cars (and their batteries) were built in America. The car industry built a lot of plans around those credits.

Here are the car-focused tax credits phased out under President Donald Trump’s One Big Beautiful Bill Act:

• 30D: The main EV tax credit—up to $7,500 off qualifying new EVs at purchase—now ends Sept. 30.

• 45W: The “leasing loophole” that gave $7,500 off any leased EV, even if it didn’t qualify for 30D. It sparked a leasing boom. Now ends Sept. 30.

• 25E: Gave $4,000 off used EVs under $25,000, with income limits for buyers. Ends Sept. 30.

• 30C: Covers up to $1,000 for home EV charger installation. Originally set through 2032, now ends June 30, 2026.

🚘️ What Does It Mean For Consumers?

• Here’s the obvious one: If someone is thinking of buying or leasing an EV, or getting a home charger installed, they should do it soon, before September ends. (Edmunds has a list of cars that come with home chargers here.)

• Fewer EV sales: Longer term, without incentives, most analysts expect electric sales in America to decline. (This has happened in Europe before.)

• Fewer affordable EVs for sale: Battery costs are still high. So if anything goes away, it’s mid-market and entry-level EVs, which are less profitable to sell.

• More air pollution, more gas use. If EVs stay too expensive and people aren’t given help to buy them, they won’t make the switch like some 1.3 million Americans did last year.

 📉 What Does It Mean For The Car Industry?

• Less pressure to make cleaner cars: As my InsideEVs colleague Suvrat Kothari wrote this week, car companies soon will no longer face steep fines if they don’t meet stricter fuel economy rules, which they planned to do by selling more EVs.

• Hitting pause on big EV investments: The truth is that electric sales weren’t meeting their sky-high expectations even before Trump came to office. Now, as the world’s second-biggest car market pulls support for EVs, the car companies will be in less of a hurry to move away from gasoline.

• A more fragmented world: More gas cars and hybrids for America, more EVs and hybrids for Europe and China, and so on. That’s expensive and complex for many car companies to pull off.

🧠 My Take:

There’s no sugarcoating things. America’s reversal on EV policy is a major setback—for climate goals, domestic manufacturing jobs, and competing with China.

But I actually don’t see this as an apocalyptic moment for EVs in America. Here are some reasons to be optimistic and excited.

• The auto industry has always chased efficiency and performance. All signs point to it moving in the electric direction, just more slowly than expected.

• Study after study shows that the vast majority of EV drivers don’t want to go back to gas again. (I’m one of them, too.) Car companies would do well to step up and serve them.

• More and more drivers are getting into this field through used EVs, which are seeing a sales boom. Those people won’t go back, either.

• The smart companies are playing the long game now on battery development, including battery plants. More batteries mean cheaper batteries, which over time means cheaper EVs. Those investments will pay off someday.

• Even in America, the charging industry is growing up and getting better all of the time.

• States and even cities will pick up the slack on EV buying incentives, as Wired noted recently. If you live in New York, Colorado, California or other states, keep an eye out.

• Finally, I brought up that BMW-China anecdote for a reason: Imagine a day when a trade deal happens with China, and BYD gets to open a factory in Ohio. It’s not implausible. The smart car companies are preparing for this now.

📰 More Stories That Matter

• A big week for General Motors on the battery front: recycling plans with startup Redwood Materials, and cheaper lithium-iron phosphate (LFP) batteries made in Tennessee.

• Also via InsideEVs: Kevin Williams reports that losing fleet and commercial EV tax credits will mean fewer electric school buses and delivery vehicles, right as that industry was taking off. Ouch.

• Rivian too had a big week. Its electric mobility spinoff Also raised another $200 million, TechCrunch reports, and it’s establishing an East Coast HQ in Atlanta.

🔍 On My Radar

• So far, the updated Tesla Model Y is selling decently, but not nearly enough to lift Tesla’s sagging sales—or fix a brand that’s been damaged by Elon Musk’s antics. I’m keeping a close eye on its sales through the rest of the year.

• The new CLA-Class is an electric do-over for Mercedes-Benz that could do over 350 miles on a charge in America. Buyers weren’t into the bar-of-soap designs of the EQ cars; will they buy this instead?

• A year in, and the Volvo EX90 still has a lot of problems, according to Consumer Reports. This will be a test of Volvo’s ability to fix them with software updates.

🔌 Charging News

• About 700 high-speed, public charging stations opened in the U.S. in the second quarter of this year, Transport Topics reports.

• East Coast gas station mega-chain Wawa is teaming up with automaker-backed charging company Ionna. EV fast-charging at gas stations! An idea whose time has come.

• BP Pulse is due to open another mega-station near LAX Airport. Forty-eight charging bays, a lounge, vending machines and WiFi. Sounds great.

• European charging software giant Monta continues its U.S. expansion with EnviroSpark.

• Canada’s largest multi-residential EV charging project is now live at Richmond Centre in British Columbia. That’s 1,212 smart EV chargers installed by Elocity at a single site.

🤖 Autonomy News

• Chinese tech giant Baidu is partnering with Uber for a global deployment of autonomous taxis.

• So is Lucid Motors. A tie-up with Uber will launch Lucid Gravity robotaxis in “a major city” next year. And Lucid gets a $300 million investment from Uber. Lucid shares rose 50% on the news.

• Trump’s pick to lead the National Highway Traffic Safety Administration wants America to move faster: the agency “cannot sit back and wait for problems to arrive with such developing technologies,” nominee Jonathan Morrison said.

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❓️ How’s My Driving?

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💡 Did You Know? The “Neue Klasse” name refers to BMW’s line of sporty sedans and coupes from the 1960s onward, which set the paradigm for the entire brand. One of its descendants is the iconic 2002. No wonder BMW expects the electric Neue Klasse to be such a big deal.

Until next time,

—Patrick George