Ford and GM have apparently worked up an interesting scheme to keep the expiring $7,500 federal EV tax credit from driving down sales. According to Reuters, the automakers are working with dealers on short-term programs that would allow customers to continue to receive the tax credit on leased EVs through the rest of the year.
The programs will operate under each automaker’s financing arm, according to documents viewed by Reuters and interviews with dealers briefed on the plan. It basically works like this: Ford and GM will buy EVs from its own dealers by having their finance divisions put down payments on all the electric models in their inventory before the tax credit expires. The dealers will then lease the vehicles to customers with a $7,500 discount baked into the price.
“The old adage, of ‘if you’re not cheating you’re not trying’ comes to mind,” said Ivan Drury, director of insights for Edmunds.com, “but, gotta give GM and Ford credit for taking advantage of the tax loophole and pushing it to the next level with a bit of creativity more so than actual cheating.”
The automakers are hoping to soften the blow on car shoppers and keep up the momentum that many dealers have been seeing in recent weeks. EV sales spiked in July and August as shoppers rushed to claim the credit before it expired on September 30th. Experts predict that once the credit vanishes, EV sales will plummet.
“Ford is working to provide Ford electric vehicle shoppers with competitive lease payments on retail leases through Ford Credit until December 31st,” Dan Barbossa, a spokesperson for the company, said in an email. (A spokesperson for GM did not immediately respond to a request for comment.)
Ford and GM reviewed the new programs with officials from the Internal Revenue Service before putting it into action, Reuters says citing three sources. In August, the IRS said vehicles must be purchased by September 30th to qualify for the $7,500 tax credit.
Of course there are some risks involved. Ford and GM will take a financial hit on any unsold EVs. And it’s unclear whether either automaker plans on extending the discount program on leased EVs through the end of the year. Ford’s F-150 Lightning was the only EV in its lineup eligible for the tax credit (the Mustang Mach-E did not meet the battery requirements). GM had several eligible EVs, including the Chevy Equinox, Blazer, and Silverado, as well as the Cadillac Lyriq, Optiq, and Vistiq, and the GMC Sierra EV.
But as Drury notes, throughout this entire year EV leasing at dealerships is hovering around two third of all sales or above as virtually every automaker leans into leasing to take advantage of the tax credit for their slower selling EVs.
“It clearly has resonated with consumers as leasing is the preferred method of purchase if you’re trying out a new technology for the first time, want the lowest monthly payment or are trying to dodge the resale value issue,” he added. “GM and Ford’s workaround will certainly lessen the gut punch that some other automakers will suffer once the credit is no longer available, but they’re also kicking the can down the road till 2026.”
Source link
