The One Big Beautiful Bill Act: What It Means for Electric Vehicles
The One Big Beautiful Bill Act (OBBBA) is reshaping tax policy in the United States. In previous posts, we examined its varying effects on the most prominent forms of clean energy production, nuclear, and renewable natural gas. Now, we turn to a sector that is that is already experiencing rapid change: electric vehicles.
In essence, the OBBBA eliminated four key electric vehicle (EV) credits: Sections 25E, 30D, 45W, and 30C. Here’s a breakdown of what that means:
Section 25E: Used Clean Vehicle Tax Credit
This tax credit was available for consumers who are below certain income thresholds and buying used electric or fuel-cell vehicles that cost $25,000 or less by 2033.
25E provided a credit of up to $4,000.
Under the OBBBA, this credit is now only available if a vehicle is purchased before September 30, 2025.
Section 30D: New Clean Vehicle Tax Credit
Analogous to Section 25E, this credit was available for consumers below certain income thresholds purchasing new, qualified EVs or fuel-cell vehicles by 2033.
30D provided a consumer purchase credit of up to $7,500.
Now, the credit under Section 30D will be eliminated if a vehicle is purchased after September 30, 2025.
Section 45W: Commercial Clean Vehicle Credit
45W provided a business-purchase credit for businesses and tax-exempt organizations that buy a qualified commercial clean vehicle by 2033.
The credit was capped at $7,500 for vehicles less than 14,000 lbs. and $40,000 for all other clean vehicles.
Auto dealers were able to take the federal tax credit as well and pass on the savings to leasing customers. Through this “leasing loophole,” the credit also could be used for vehicles that didn’t meet stringent requirements to claim 30D.
Now, this credit is only available for vehicles purchased before September 30, 2025.
Section 30C: Alternative Fuel Vehicle Refueling Property Credit
This investment tax credit (ITC) was available to home or business owners who install EV chargers or dispensers of certain alternative fuels, such as ethanol or biodiesel. It was available for fueling infrastructure placed in service by 2033.
For individuals, the credit equaled 30% of the cost of the purchased property up to a maximum credit of $1,000 per item (each charging port, fuel dispenser, or storage property).
For businesses and tax-exempt organizations, the credit equaled 6-30% of the cost of the property up to a maximum credit of $100,000 per item.
Under the OBBBA, this credit is only available for infrastructure placed in service by June 30, 2026, giving recipients just under one year to place qualifying assets in service.
With these tax incentives set to be phased out quickly, we are seeing a renewed short-term rise in EV sales. Automakers and dealers are trying to move inventory while federal incentives are intact, and customers are trying to beat deadlines and the resulting upcoming tax hikes (as well as potential tariffs).
Once the EV tax credits are gone, the growth of the EV market likely will slow, but we don’t expect it to stop. While up-front prices of EVs are only falling slowly, customers still can save in the long run. A 2023 analysis by the nonpartisan think tank Energy Innovation Policy & Technology found that it is cheaper to charge all EV models than to fill up their gas-powered counterparts in every state.
Whether the U.S. auto industry will be able to capitalize on this long-term growth remains an open question. Investments in domestic EV production will become harder to justify in the immediate future, since EV battery production tax credits (PTCs) will end four years early, tighter emissions regulations have been scrapped, and a few members of Congress are still considering a possible federal EV fee. However, some U.S. automakers looking to sell abroad are already doubling down on EVs.
The sudden EV tax credit phase-out creates a challenge for clean technology companies to adapt to a changed environment. They can meet this challenge with bold leadership and compelling, strategic messaging around their cutting-edge tech. Team Silverline is here to continue to help these companies and others at the forefront of the clean tech and energy industries meet the moment.
Need a partner to help your company navigate the shifting landscape? Please reach out to us at workwithus@teamsilverline.com for more insights and our public affairs team will be pleased to have a dialogue.
