General Motors backtracks on crucial program following pressure from officials: 'After further consideration, we have decided not to'

General Motors put plans to creatively extend the EV tax credit in reverse, Reuters reports, after a lawmaker's last-minute intervention. 

What's happening?

Legislation originally dating to 2008 under President George W. Bush created a long-standing $7,500 federal tax credit for qualifying plug-in electric vehicles, but a new bill signed in July discontinued the incentive effective Sept. 30 — seven years before it was originally slated to end.

According to Reuters, GM devised a workaround to "extend" the EV credit for the final quarter of 2025. 

Initially, the automaker planned to leverage its in-house financing arm, GM Financial, to "initiate the purchase" of fully-electric models to qualify for the credit. EV buyers would then complete the sale, ostensibly qualifying for the $7,500 credit during the final three months of 2025.

However, Sen. Bernie Moreno (R-OH) was tipped off to the loophole. Reuters described Moreno as "a former car dealer who is active in auto policy," and said the lawmaker "raised concerns" about GM's EV plans.

In fact, on Sept. 30, Moreno sent a letter to Treasury Secretary Scott Bessent, alleging that "certain car companies" were "gaming" the credit. Moreno implored Bessent to "to close this loophole and address the total violation of Congressional intent by these nefarious actors."

Moreno framed his concern as for the "domestic auto industry," of which GM is a prominent part. In response, GM scrapped the financing arrangement.

"After further consideration, we have decided not to claim the tax credit," the automaker told Reuters on Oct. 8.

Why is this important?

GM reportedly devised the plan to ease pressure on dealerships amid the EV credit's rather abrupt reversal, as did Ford, another domestic automaker.

A spokesperson for Ford declined to comment to Reuters when asked if they intended to reverse course.

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Automakers with EV inventories were left scrambling when the credit's expiry was finalized in July, and the National Automobile Dealers Association begged Congress to reconsider.

"Dealers are still carrying a high EV inventory with approximately 140,000 EVs currently on dealer lots. If EV tax credits are going to be repealed, NADA urges Congress to include a reasonable transition period," the organization explained.

EV sales surged throughout the summer, but the impact of the tax credit's rescission on electric vehicle sales remained to be seen. That market uncertainty could impact dealership inventories and complicate the process for drivers trying to make their next car an EV.

What's being done about it?

Although this sweeping policy reversal has wreaked havoc on the fledgling EV market in the United States, American drivers don't seem to be losing interest in EVs.

GM's decision to reverse course on federal credits wasn't the American automaker's only approach. According to Elektrek, GM opted to "fund incentive lease terms" to the tune of $6,000 throughout October.

States are also stepping up to bridge the gap, too: Colorado implemented a generous EV incentive program in response to the end of the credit.

"The market has made it clear, EVs are here to stay," Gov. Jared Polis said of the new incentives.

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