On June 28, 2025, Senate Republicans unveiled a revised tax and budget bill that would terminate the $7,500 federal tax credit for new electric vehicle (EV) purchases and leases by September 30, 2025, alongside the $4,000 credit for used EVs, according to Reuters. This move marks a significant shift from previous policies promoting EV adoption to combat climate change, raising concerns among EV owners and manufacturers about affordability and market growth.

Accelerated Timeline for Tax Credit Elimination

The Senate’s proposal fast-tracks the end of EV incentives compared to earlier drafts, which allowed 180 days for new EV credits and 90 days for used ones post-enactment. The House version, in contrast, extends the $7,500 credit through 2025, and until 2026 for automakers yet to hit the 200,000-EV sales cap. The Senate’s aggressive timeline could disrupt consumer planning, as the credit has been pivotal in offsetting EV costs, often reducing prices by 15-20% for models like the Tesla Model 3 or Ford Mustang Mach-E.

Senate Republicans Push To End $7,500 Ev Tax Credit By September 30, 2025

Broader Policy Shifts Favoring Gas Vehicles

The bill includes measures easing restrictions on gas-powered vehicles, such as eliminating fines for non-compliance with Corporate Average Fuel Economy (CAFE) standards. This change could lower production costs for traditional automakers but risks slowing the transition to cleaner transportation. Additionally, a provision exempts interest on auto loans for U.S.-made vehicles from taxes through 2028 (phased out for incomes above $100,000) aims to boost domestic manufacturing but may disproportionately benefit gas vehicle buyers, as EVs typically have higher upfront costs.

Impact on EV Industry and Consumers

The proposed cuts threaten the EV market’s momentum, which saw 1.2 million U.S. sales in 2024, driven partly by tax incentives. Without the $7,500 credit, a $40,000 EV could effectively cost $47,500, potentially deterring budget-conscious buyers. Manufacturers like General Motors and Rivian, still scaling production, may face reduced demand, while Tesla, having exhausted its credit eligibility, could see a leveled competitive field. The used EV market, critical for broader adoption, faces similar challenges with the $4,000 credit’s elimination.

Postal Service EV Plans Spared

A notable concession in the bill spares the U.S. Postal Service’s (USPS) EV fleet. Republicans dropped a proposal to scrap 7,200 electric delivery vehicles, including Ford e-Transits and Oshkosh Defense’s Next Generation Delivery Vehicles, after the USPS warned of a $1.5 billion loss. “Scrapping our EVs would have been a costly setback,” a USPS spokesperson stated, per Reuters. This decision preserves a key federal commitment to electrification.

Regulatory Context and State Pushback

The Senate’s move aligns with broader Republican efforts to roll back EV-friendly policies, including President Trump’s recent resolution to block California’s plan to phase out gasoline-only vehicles by 2035, adopted by 11 states representing a third of the U.S. auto market. This federal-state tension could complicate automakers’ strategies, as they navigate differing regulations across regions.

What’s Next for EV Owners?

For EV enthusiasts, the Senate’s proposal signals a critical juncture. Buyers planning purchases may need to act before September 30, 2025, to secure the $7,500 credit, while used EV shoppers face a similar deadline for the $4,000 incentive. The bill’s passage remains uncertain, requiring House approval and President Trump’s signature. EVXL advises monitoring legislative updates, as amendments could alter the timeline or scope. For now, the EV community braces for a potential shift in affordability and adoption incentives.