EV rebates have saved Pa. and N.J. drivers up to $7,500 on cars. Trump wants to end them, but may face headwinds.
EV prices are down, incentives are up, and consumer rebates of up to $7,500 are on shaky ground.
If you’ve been thinking of purchasing a new electric vehicle, plug-in hybrid, or hybrid-powered car, the best time to shop may be before Jan. 20.
Prices are down and incentives high. And, some experts say, we should expect an end to federal EV rebates — which have saved qualifying consumers up to $7,500 — under the incoming Donald Trump administration.
“For consumers interested in an EV purchase, strike while the battery is hot,” said Ivan Drury, director of insights for car analyst website Edmunds.com, in a statement released in November. “The federal tax credit combined with slashed prices due to slowed sales momentum has contributed to electric vehicles becoming labeled as some of the best deals on the market in 2024.”
EV registrations have grown in Pennsylvania and New Jersey this year.
Pennsylvania had nearly 83,000 registered EVs as of Nov. 30, an increase of 34% since 2023. New Jersey saw a 26% increase in EVs in nine months from the end of 2023 to Sept. 30, surpassing 160,000 registrations.
While President Joe Biden’s signature legislation, the Inflation Reduction Act, incentivized EV infrastructure and manufacturing in large part with consumer rebates, the incoming administration appears to be working to roll back these deals and return the country to the old internal-combustion engine and its gasoline consumption.
But automakers and others with incentives to sell EVs and hybrids are pushing back behind the scenes, addressing Congress and the president-elect himself in an effort to continue on a steady path, rather than tossing years of planning and restructuring into the trash. And at least one analyst believes the change may never even come to fruition, as it’s too difficult and too tied up in red states, making the political costs too high for both sides.
What are the consumer rebates?
The Inflation Reduction Act of 2022 changed older EV rebate rules.
The EV, PHEV, or hybrid must be for your own use in the U.S. The rebate is limited to households with adjusted gross income of $300,000 or less if married, $225,000 for head of household, or $150,000 for others.
Since April 2023, vehicles qualify for $3,750 if they meet the minerals requirement and $3,750 if they meet the battery requirement. The vehicles must weigh less than 14,000 pounds, have at least a 7-kwh battery, and be assembled in North America. Trucks and SUVs must cost less than $80,000; others less than $55,000.
According to Edmunds.com, vehicles that qualify for the full federal rebate include: Acura ZDX, Cadillac Lyriq and Optiq, Chevrolet Blazer EV, Chevrolet Bolt EUV, Chevrolet Equinox EV, Ford F-150 Lightning, Honda Prologue, Tesla Model 3, Tesla Model X, Tesla Model Y, and Volkswagen ID.4.
Why is ending rebates tricky?
Sam Fiorani, vice president for global vehicle forecasting at AutoForecast Solutions in Chester Springs, has watched the assembly plants being built from Georgia up to Michigan and said closing these factories — which also have specialized battery plants springing up nearby — would create ripple effects in the surrounding communities.
“If you dismantle the demand for electric vehicles, there are a lot of assembly and battery plants that are already established in Republican areas,” Fiorani said. “So if the demand for EVs goes away, then suddenly there are no workers in these plants, and that can upset the party that is taking away the jobs.”
“All told it is not a small number of factories,” Fiorani added.
Volvo’s Mack Truck facility in Macungie, Lehigh County, is one of them. It was one of three Volvo facilities that received a combined $208 million in federal money to build electric trucks.
Furthermore, ending the consumer rebates wholesale requires Congress to get on board, because legislation can’t be changed simply via presidential directive.
Even with a Republican Congress, that may not be a slam dunk.
“Although it hasn’t been highly visible, there’s bipartisan support for those investments in electrification,” said Genevieve Cullen, president of the Electric Drive Transportation Association (EDTA), whose members include Ford, General Motors, Mitsubishi, Stellantis, Toyota, Carvana, EVGo, and Walmart. She cited a $320 billion investment in electrification measures in the U.S.
A group of 18 House Republicans, including New Jersey’s Thomas Kean Jr. (R., 7th District), sent a letter to House Speaker Mike Johnson (R., La.) in August cautioning against a full repeal of the Inflation Reduction Act. They essentially recommended taking “a scalpel and not a hatchet to these policies, because these incentives are reinforcing the jobs and investments in our communities,” Cullen said.
While a number of automakers contacted by The Inquirer declined to comment for this article, organizations of which they are members, like the EDTA, are working to persuade the administration and Congress to think twice.
The Alliance for Automotive Innovation, an industry trade group representing most auto manufacturers along with suppliers and innovators, appealed to the House Ways and Means Committee, making the case for extending the rebates. They followed up with another letter to Trump after the election.
“Even as automakers invest in increasingly connected, automated, and electrified vehicle fleet, they face unprecedented geopolitical and market pressure — a point you regularly made during the campaign,” the letter to Trump said.
Furthermore, fuel economy standards are stringent and rising — by the 2031 model year, it will be 50.4 miles per gallon under National Highway Transportation Safety Administration rules. They will be difficult to meet without EVs, PHEVs, and hybrids in the lineup, Fiorani said.
How popular are EVs?
EV sales growth slowed somewhat in 2024, but bounced back in the third quarter thanks to incentives and expanding choices, according to Cox Automotive. Sales in the third quarter grew 11% year over year, hitting new records for market share and volume.
Still, “the demand for EVs has not been as strong as manufacturers believed [it would] be,” Fiorani said. “Analysts knew a long time ago this was not going to be smooth and was not going to be a steady strong shift.”
In California, Gov. Gavin Newsom has vowed to expand state EV rebates if federal incentives are cut. Democratic governors in Pennsylvania and New Jersey have yet to make similar pledges. EV buyers face a mixed bag of incentives and taxes.
Pennsylvania and New Jersey both offer EV rebates to residents of up to $4,000, and both are subject to income rules. New Jersey also offers a $250 charger rebate.
New Jersey’s rebate has grown, but the state recently ended its sales tax moratorium on EVs.
In Pennsylvania, EV owners must soon pay an annual tax for road maintenance — it will be $200 in 2025, rising to $250 in 2026.
Long term, changes in EV pricing structure due to rebates ending could hamper sales immensely.
“Obviously, anything that … makes an EV more expensive for the consumer, especially in a softer-than-expected market, will make for a more challenging environment,” said Kevin Mazzucola, executive director of the Auto Dealers Association of Greater Philadelphia.
But EVs have the potential to reach their full sales potential as 2024 turns into 2025. Many come with financial incentives, and buyers may be persuaded to get in on the rebates while they’re still a certainty.
Simply put, the price is right — or at least the rebate helps it not feel so wrong.