After the Federal Credit Vanished: Automakers Pivot to Finance & Lease Math

Rich Berliner
Oct 21
3 min read

The $7,500 federal EV tax credit ended on Sept. 30, 2025. A sales rush in Q3 set records, but the post-credit hangover is here—so automakers are cushioning the landing with price cuts, lease cash, subvented APRs, and stripped-down trims that lower entry prices. Think of it as subsidy-by-spreadsheet: captive finance units and dealer programs replacing federal money to keep payments in the same ballpark.

The Incentive Toolkit (What’s Replacing The Credit)

MSRP cuts. Hyundai slashed 2026 Ioniq 5 stickers by up to $9,800 and is still offering $7,500 cash on remaining 2025 models—essentially recreating the expired federal value for near-term buyers.
Captive-funded lease deals. Ford and GM briefly tried to preserve the federal credit on leases via pre-deadline transactions, then backed off under political scrutiny. Both say they’ll maintain aggressive captive-funded lease incentives instead. Expect subsidized money factors, boosted residuals, and dealer cash to hold monthly payments down through year-end.
Brand-wide purchase credits. BMW rolled out $7,500 off MSRP across its EV lineup for October, a blunt instrument to keep transactions moving without federal help.
Ongoing PHEV lease support. Stellantis (Jeep 4xe, etc.) continues to advertise up to $7,500 applied as cap-cost reduction on leases via preferred lenders—one reason plug-in hybrids may hold share if BEV payments drift up.
Lower-cost trims. Tesla introduced cheaper Model 3/Y variants by removing content (no Autosteer, fewer features), cutting entry prices by roughly $5,000 to keep out-the-door costs compelling.

Why this Pivot Happened

The credit’s sunset pulled demand into Q3—438,487 EVs sold; ~10.5% share, a U.S. record—leaving a Q4 air pocket that automakers are trying to bridge with their own money. At the same time, some OEMs (notably GM) are re-phasing capacity and taking charges to align with a slower near-term adoption curve, so incentive dollars are a cheaper stopgap than overproducing.

How Deals Are Structured Now

Price-to-payment engineering. Captive finance arms lower APR (“rate buydowns”) or money factors, top up lease cash, and set optimistic residuals on fast-turn trims. Net effect: a familiar payment even with the federal $7,500 gone. (Watch fine print on due-at-signing.)
Targeted, short-window promos. Expect month-by-month offers that spike local demand around inventory hotspots and new arrivals (e.g., Hyundai’s 2026 Ioniq 5 lineup, Tesla’s budget trims).
PHEV as a pressure valve. PHEV leases often pencil better post-credit; Stellantis is leaning on this to keep payment ladders intact while BEV pricing normalizes.

Automaker Snapshots (October 2025)

Hyundai/Kia: Deep MSRP cuts and cash on Ioniq 5; Kia continues to market the EV9 as a family hauler that doesn’t rely on federal subsidies.
Ford: Killed the lease “carryover credit” idea but kept competitive lease payments in market; selective price moves (and trims) are appearing to keep the F-150 Lightning and Mustang Mach-E in the hunt.
GM: Also dropped the lease workaround; will self-fund lease incentives through October while pacing production and absorbing a $1.6B EV-related charge.
BMW: $7,500 purchase credit across EVs in October; expect leasing support to vary by region and inventory.
Tesla: New lower-content trims for Model 3/Y reset entry pricing; ongoing, rapid list-price adjustments continue to act like rolling incentives.
Stellantis: Prominent lease incentives/cap-cost reductions on PHEVs; BEV offers vary by market and lender.

What to Watch Next (Market Pulse, Not Advice)

Payment parity vs. ICE: If monthly payments for mainstream EV crossovers (Model Y, Ioniq 5, Equinox EV) can match comparable ICE models via captive support, demand should stabilize after the Q4 dip.
Duration of OEM support: How long can brands fund $7,500-equivalent deals? Watch quarterly reports and guidance alongside offer calendars.
Lease share rebound: With purchase credits gone, expect lease mix to rise—particularly where residual setting is aggressive and service networks are strong.
PHEV stickiness: Strong PHEV lease math may keep shoppers in plug-ins while BEV prices reset.

Bottom Line

The federal check is gone, but the effective discount lives on through MSRP cuts, captive finance, and lease math. For market watchers, the question isn’t “are there incentives?”—it’s whose balance sheet they’re on, and for how long.