As the clock ticks toward September 30, 2025, the federal electric vehicle (EV) tax credits are set to expire, marking the end of a significant era in U.S. auto policy. Under the current system, buyers of new EVs can claim up to $7,500, while used models qualify for up to $4,000—subsidies designed to boost adoption amid climate goals. But with Congress passing legislation to terminate these incentives, the "Fed money" vanishes, leaving a big question: What happens to new and used EV prices? Will used values soar or plummet? Will new prices drop to lure buyers, or will sales simply freeze?
Let's break it down. For new EVs, the removal of the $7,500 credit effectively hikes the cost to consumers overnight. Economists argue this could dampen demand, especially as EVs already face hurdles like charging infrastructure and range anxiety. Manufacturers like Tesla, Ford, and GM might respond by slashing MSRPs or offering deeper discounts to maintain volume—similar to how the industry reacted to past incentive phase-outs. However, if production costs remain high due to battery prices and supply chain issues, prices could hold steady, leading to a sales slowdown rather than a drop. Recent data shows uncertainty is already fueling a rush in 2025 sales, with new EV registrations up amid fears of post-subsidy sticker shock. But once the credits end, analysts predict a potential 20-30% dip in demand, forcing automakers to choose between profit margins and market share.
The used EV market adds another layer of complexity. Without the $4,000 credit, affordability takes a hit, potentially tanking values as budget-conscious buyers shy away. Yet, some experts counter that higher effective new EV prices could drive shoppers to used options, propping up resale values. Historical trends from the early 2010s, when initial EV incentives waned, saw used prices stabilize or even rise temporarily as supply tightened. Factors like battery degradation and warranty concerns could exacerbate depreciation, though a growing surplus in U.S. battery manufacturing might indirectly lower repair costs, supporting values. In Q3 2025 reports, used EV prices are already volatile, with models like the Nissan Leaf dropping 15% year-over-year amid subsidy jitters.
Overall, the post-subsidy landscape hinges on broader economics: If gas prices spike or state incentives fill the void, EVs might weather the storm. But a full removal could impose societal costs exceeding $33 billion, per recent analyses, by slowing the shift from fossil fuels.
So, readers, what's your call? Will used EV values tank due to lost affordability, or rise as the cheaper alternative? Will new prices plummet to keep showrooms buzzing, or will sales halt until tech advances catch up? Drop your predictions in the comments for bragging rights when the dust settles—history will judge the boldest forecasters!