Automakers Expand Incentives to Move EVs After a Sluggish Start

With the expiration of federal tax credits for electric vehicles (EVs) looming on September 30, 2025, automakers are going all-in on enticing potential buyers with rock-bottom pricing and attractive lease offers. However, despite these aggressive efforts, U.S. EV sales have faced a significant slump.

A Struggling Market

Even with incentives in place, electric vehicle sales have fallen by 6.2% in June, marking the third consecutive month of decline. Tesla, which dominates the U.S. EV market with roughly half of all EV sales, reported a 13.5% drop in global sales during the second quarter. These figures highlight the challenges that persist in convincing American drivers to fully embrace electric cars, even as automakers push forward with record-high customer discounts and promotions.

Hyundai is promoting a $169-a-month lease on its Ioniq 6 sedan, which comes with a sticker price of around $38,000, making it significantly more affordable than leasing a gasoline-powered model. Similarly, Kia is offering the Niro EV for as low as $129 per month. Even the high-end Hummer EV, priced at $100,000, is being leased for $650 per month, a deal that is comparable to gas-powered vehicles with much lower sticker prices.

But despite these eye-catching offers, dealers are struggling to move EVs off their lots. For instance, the dealership in Kokomo, Indiana, sells about one Hummer EV per month, with interested buyers often opting for gas-powered alternatives like the Cadillac Escalade or GMC Denali.

The Barriers to EV Adoption

Why the hesitation? "It’s [driving] range, it’s cost, and it’s charging infrastructure," said Mark Barrott, automotive lead at consulting firm Plante Moran. These three concerns have been consistent roadblocks for potential EV buyers. While EV models have proliferated—there are now 75 models available in the U.S. compared to fewer than 20 in 2020—the barriers to mainstream adoption remain formidable.

Despite the increase in EV options, the U.S. still faces a long road ahead to overcome the entrenched preferences for gasoline-powered cars. Even with twice the incentives available for EVs compared to gas-powered vehicles, the transition has not been seamless. Current financial incentives, such as the $7,500 federal EV tax credit, have played a major role in driving sales, but they are set to end soon due to the phasing out of these credits by the current administration.

Challenges Beyond Price

For many Americans, the decision to switch to an EV goes beyond the upfront cost. There are still concerns about the availability of charging infrastructure, especially in rural areas or along highways. While some automakers, like Ford, BMW, and Hyundai, are attempting to allay these concerns by offering free home-charger installations or covering the costs of public charging, these incentives might not be enough to sway hesitant buyers.

The lack of sufficient public charging stations combined with the higher upfront costs of EVs compared to internal combustion engine (ICE) vehicles makes the transition to electric mobility more complicated than it appears. And while leasing remains the primary way to move EVs off dealer lots, this method won't last forever, especially as the federal tax credit for leases is set to expire alongside the sales tax credit.

The Road Ahead

With the EV market about to lose the subsidies that have been crucial to its growth, analysts are closely watching how manufacturers and consumers will respond to this shift. Car dealers, particularly those working with EVs, are now bracing for a “reset” once the tax credits are gone, as noted by David Christ, general manager of Toyota in North America.

Will the introduction of new EV models, stronger government incentives, and expanded infrastructure help reverse the trend? Or will the expiration of the tax credit be a blow too hard to recover from? One thing is clear: As the market moves toward an unsubsidized future, automakers, dealers, and consumers will need to make tough decisions about the future of EV adoption.

For now, the question remains: Has there ever been a better time to buy an EV? The clock is ticking on the tax credit, but whether the savings are enough to sway buyers in the long term is still uncertain.

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