EV Tax Credits Are Over. Here's How To Think About What's Next

Admit it: The tax credits were always a bit of a mess. The restrictions were onerous, centered around the origin of the car, its battery and its critical mineral components—essentially had to be sourced in North America.

Fewer than 20 cars qualified for the tax credit at purchase. Nearly all of those were made by General Motors, Hyundai Motor Group or Tesla.

The credit did apply to all EVs that were leased. That’s why so many were, and often at outrageously discounted prices that weren’t remotely profitable for their makers. That never felt sustainable.

But they appealed to many Americans eager for a good deal on a new car, especially those already stretched thin in other parts of their finances. And who can blame them?

The deck had been stacked against EV adoption for a while. Anti-electric propaganda, the partisan bias against clean energy, resistant car dealers and other factors made the type of “fuel” a car runs on rather political and cultural, when it didn’t need to be.

I cannot overstate the impact of tariffs on these decisions. If an automaker is facing billions of dollars in tariff costs every quarter, an unprofitable EV that’s now more expensive is the first to go.

But the biggest factor here: America has no real fuel economy rules anymore. Face it: If automakers aren’t forced to make cleaner cars and don’t get the “carrot” to help people buy them, then why bother going electric?

We are already seeing a slowdown in EV models on the American market. Ford, Acura, Ram, Volkswagen, Nissan and Porsche are just a few that have either canceled future electric models or pulled existing ones—some as recently as this week.

And let’s face it, some of those EVs purchased with steep price cuts and tax credits just weren’t that good. But they’re getting better and better all of the time. The pace of technology in this space leaves gas cars in the dust.

Still, the vast majority of American drivers—about 96%, per the Zero Emission Transportation Association—love their EVs and won’t go back to gas. Add in all the people buying used EVs now, and that’s a lot of future demand waiting to be seized upon.

This situation in America stands in stark contrast to Europe and China, where new EVs debut all the time. Those car markets are going to be heavily electrified in the coming years.

If automakers want to compete globally, they have to invest in this technology.

In the meantime, the U.S. could be more isolated, and electric sales will be more regional—more going to states like California or those that follow its emissions rules.

Prices will go up. But carmakers will still respond with discounts.

The cars will have to compete on their own merits now. No more participation trophies. The better product wins. That may be good news in the long run, since complacency opens the door for innovative disruption.

And what about the day when Trump is out of office, and automakers face fuel economy and emissions rules again? It’d be insane to assume that wouldn’t happen.

Ultimately, the mobility sector will propel EV adoption. Autonomy and electrification are inseparable. Robotaxis, arguably the hottest area in tech, won’t be running on gas.

Here’s Uber CEO Dara Khosrowshahi: “The other really positive factor with AVs is that AVs are, by nature, also electric,” he said recently. And those are ready for “prime time”: “The rate of acceleration in terms of the development of the technology, the safety of the technology, is pretty extraordinary.”

Export-heavy Volvo, facing tariff pressure, announced it will build a new model in the U.S., my colleague Suvrat Kothari reports. And it’s either an advanced plug-in hybrid or an EREV. (I told you those would be a big deal.) [InsideEVs]

Meanwhile, Volvo is having to replace the entire computer system in its EX90 SUVs after a year of high-profile software disasters. “A dumpster fire inside a train wreck,” as one owner put it. [InsideEVs]

The U.S. has settled on a 15% tariff on European-made cars, which is good news for those automakers. It’s better than 25%, but still above the 2.5% of the pre-Trump 47 era. [Bloomberg]

Still MIA on a lower tariff deal: South Korea, whose rates sit at 25% for now. Follow-up talks to drop that rate have stalled. That has big implications for Hyundai, Kia and various suppliers. [Korea Times]

Jaguar Land Rover’s factories will remain halted for a while over, of all things, a cyber-attack. [Just Auto]

Obviously, we’ll be keeping an eye on EV prices in a post-tax credit world. But for now at least, my colleague Tim Levin reports they’re now cheaper on average than gas cars. Thank all the fire-sale deals. [InsideEVs]

But if those deals evaporate, could the rest of the car market start to crater in Q4? People are squeezed out on car prices and maybe, when the $250-a-month lease deals are gone, they may just stop buying. [WSJ]

Sales of electric heavy trucks are taking off—just mostly in China and Europe, not the U.S. I am very curious how these vehicles will solve the big-battery challenges we see on consumer vehicles. [BloombergNEF]

Toyota has officially opened Woven City, its planned community near Mount Fuji that will, among other things, serve as a testbed for autonomous vehicles. It’s a big investment—but the payoff is unclear. [Bloomberg]

As covered previously here on Route Zero: The EV sector may be slowing down, but the charging industry is using this moment to race ahead. [Axios Mobility]

Tesla is still leading the pack in charger growth. It’s on track to double its Supercharger network by 2030. [Axios Mobility]

Perhaps we’ve been thinking about EV charger reliability all wrong: It’s not uptime that matters, but whether it works on the first try. And a new study shows only 71% of charging attempts actually succeed. [ChargerHelp]

The Voltpost Air, which can turn a variety of lampposts into Level 2 EV chargers, has landed in Brooklyn’s waterfront. This is a great solution that I hope can scale elsewhere. [The EV Report]

The state of California now has 201,180 public and shared EV chargers—almost 70% more than its total gas nozzles. [California Energy Commission]

WeaveGrid, which provides a software platform that connects EVs to the electric grid, has secured a strategic investment from LG Technology Ventures. [WeaveGrid]

“Maybe we should hold off on big investments in the U.S.” South Korea’s prominent battery industry is rattled by the recent immigration raid on the Georgia Hyundai-LG plant: [Forbes]

Despite its U.S. retreat from electrified vehicles, Stellantis just unveiled a new Intelligent Battery Integrated System developed in partnership with TotalEnergies subsidiary Saft that could cut charging time by an hour. [Stellantis]

Chinese battery giant CATL will start shipping sodium-ion batteries to local automakers next year. They offer potentially lower costs and can charge effectively at sub-zero temperatures. [Automotive News]

Meanwhile, California-based sodium-ion battery company Natron Energy has folded, in another blow to the U.S. homegrown battery industry. [Heatmap News]

But in good news: Peak Energy just switched on a 3.5 MWh sodium-ion battery for energy storage—first of its kind at grid scale. [Electrek]

Battery technology company 24M Technologies has devised a method to integrate sealed electrodes directly into battery packs, offering up to 50% better energy density. [ChargedEVs]

Europe’s recycling mandates are about to turn battery recycling into a huge business in that part of the world. [Stratview Research]

The Trump administration is seeking as much as a 10% stake in Lithium Americas, in which GM is a major investor. [Reuters]

UK startup Wayve has a promising approach to AI-powered autonomy. Next, it’s headed to trials on Tokyo’s streets with Nissan, as part of that company’s next-generation ProPilot technology. [AI Business]

Lucid Motors has delivered its first Gravity SUV to Nuro so it can be retrofitted for Uber robotaxi use. Now, 19,999 more to go. [The Verge]

Amazon-owned Zoox is preparing for wider commercial deployment of its boxlike autonomous taxis, and is seeking the go-ahead to do so from U.S. regulators. The taxi has no steering wheel or pedals. [Bloomberg]

Germany has the engineering know-how to be an AV powerhouse. So why are there so few AV deployments there compared to the U.S. and China? [Deutsche Welle]

Baidu's Apollo Go, a promising Chinese robotaxi service, will start testing 50 AVs in Dubai soon. [PR Newswire]

Waymo’s next act? “Corporate self-driving taxis,” aka “Waymo for Business,” which could be ideal for employers looking to manage and track business travel. [The Verge]

In China, for China: Momenta will power Mercedes-Benz’s ADAS technology in that country, starting with the new electric CLA-Class. [CnEVPost]

Elon Musk's artificial intelligence startup xAI is suing OpenAI in California federal court, alleging the theft of trade secrets. [Reuters]

As AI continues to develop, it’s likely to be a central part of the software-defined vehicle. Here’s what that integration could look like over the next few years, depending on where you are in the world. [Wards Auto]

Hertz’s AI vehicle scanner was supposed to be a game-changer for the vehicle damage inspection process. Here’s what went wrong. [CX Dive]

Half of U.S. car dealers expect AI will mean fewer jobs by 2030, according to a new study; many even expect AI to sell vehicles autonomously in less than three years. [Phyron]