The federal electric vehicle (EV) tax credit expires at midnight, ending a 17-year policy pillar that helped close the price gap with gasoline vehicles and turbocharged adoption; the immediate fallout is likely softer demand, leaner EV production, and a strategic pivot by legacy automakers toward hybrids and profitable ICE nameplates, while stopgap leasing workarounds cushion some of the blow.
The end of the subsidy is a structural shock already rippling upstream: battery makers face a growing US surplus and shelved factory plans, undermining stated re-shoring ambitions and setting up a whipsaw risk of future shortages if capacity is cut too deeply.
Ford CEO Jim Farley, speaking at the Ford Pro Accelerate summit in Detroit on Tuesday, said he sees a huge impact from the policy change. While he still sees EVs being a “vibrant industry” going forward, it’s also “going to be smaller, way smaller than we thought.” He called the end of the $7,500 consumer incentive a “game-changer” and said he wouldn’t be surprised if EV sales in the U.S. go down to 5% of the industry from the current level of roughly 10%-12%. The most recent forecast from J.D. Power and GlobalData estimated that EVs would account for 12.2% of new vehicle sales in September 2025.
Farley reminded the audience that he always says “the customers are pesky. They surprise you.” And what he’s learned is that “customers are not interested in a $75,000 electric vehicle. They find them interesting. They’re fast. They’re efficient. You don’t go to the gas station. But they’re expensive.”
The good news for car makers, Farley added, is that “partial electrification is more interesting to customers than we thought … we think hybrid, EV plug-in, E-revs, those kind of partial electric solutions, America is going to fall in love with, or already is falling in love with.” And they’re falling out of love with pure-play EVs, he implied.
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