Why Now May Be The Best Time To Buy An Electric Car

Get ‘em while they last, folks.

As it stands, several 2004 and 2005 full-electric vehicles remain eligible for a one-time $7,500 federal tax credit that, for 2024, can either be deducted from the year’s tax bill, or be collected up front as part of the transaction.

While the credit is limited to electrified trucks, vans, and SUVs priced at less than $80,000, and passenger cars with MSRPs no higher than $55,000 that exceed set levels of domestic content and assembly (and are subject to buyers’ income limits), many import brands have implemented work-arounds to level the playing field. Cash-back rebates as generous as $8,250 on the Kia EV9 are plentiful, with many automakers additionally incorporating the full tax credit in EV lease deals as part of a loophole in last year’s Inflation Reduction Act.

In addition, a few qualifying plug-in hybrid (PHEV) models are eligible for federal tax credits of $3,750-$7,500 that can also be used as an up-front discount for eligible buyers.

On top of that, EV buyers in the pre-owned market can take advantage of a tax credit as rich as $4,000 or 30 percent of a used model’s transaction price, whichever is lower. To qualify, the vehicle must have had only a single owner, and it must be purchased from a dealership; assembly or parts sourcing do not apply here, though buyer income limits apply.

But question marks remain regarding not only the future of EV tax credits’ (and consequently, non-qualifying automakers’ countering rebates), but the cost of battery-powered vehicles moving forward. Donald Trump has made it clear he’s no fan of EVs. In past speeches derided the credits and pledged to eliminate them, though with Tesla CEO Elon Musk now being a close confident, that stance could soften by the time the president-elect takes office.

Perhaps more importantly, Trump has pledged to enact a number of tariffs that could well boost the prices not only of electric vehicles, but virtually all cars, trucks and SUVs sold in the U.S. For starters, he proposes an additional 10% tariff on goods coming from China, from which a great number of critical auto components are sourced.

Perhaps more impactful would be a purported 25% tariff on goods that cross the border from Mexico and Canada. Many models, including the heavy-duty versions of the Ram pickup and certain versions of the Chevrolet Silverado, are built in Mexico. Likewise several key models hail from Canada, with some vehicles and/or components sometimes crossing either border multiple times for components and assembly on the way to U.S. showrooms.

Should they come to fruition, manufacturers would most likely pass part or all of the added costs resulting from the tariffs on to consumers, which could wreak havoc with a new-vehicle market that’s already being plagued by affordability issues.

Though the idea behind the proposed tariffs would be to spur domestic production of autos and other products, the fact is it would take years – perhaps longer than Trump would remain in office ­– to build domestic factories, withdrawing from the global market, to produce the myriad components that go into building a car, truck or SUV from scratch.

At any rate, with rising prices a possibility across the board, and specifically the EV tax credits in question, analysts are predicting a mini-boom in electrified rides before inauguration day. “There is concern that federal tax credits for EVs and PHEVs may be reduced or eliminated when the new administration takes office,” says Charlie Chesbrough, senior economist at Cox Automotive.” As a result, EV sales may experience some tailwinds, leading to robust activity through the end of the year.”

Right now, shoppers can take advantage of year-end discounts and other EV sales promotions ­– including Ford’s current complimentary home charger and installation offers on its F-150 Lightning and Mustang Mach-E models. The deals should be especially rich on last year’s models that have lingered on dealers’ lots. And that’s on top of steep cash rebates, cut-rate financing deals and discounted leases being the order of the day in this segment.

In short, it would seem that the coming weeks could well be the best (and perhaps last) time to buy an electric vehicle at an affordable price.

EVs and PHEVs Eligible For Federal Tax Credits

For the record, these are the full-electric vehicles from the 2024 and 2025 model years that still qualify for the one-time $7,500 federal tax credit, subject to price limitations:

• 2024 Acura ZDX
• 2024-2025 Cadillac Lyriq
• 2024-2025 Chevrolet Blazer EV
• 2024-2025 Chevrolet Euinox EV
• 2025 Chevrolet Silverado EV
• 2024-2025 Ford F-150 Lightning
• 2024 Honda Prologue
• 2024 Nissan Leaf/Leaf SV Plus
• 2024 Rivian R1S
• 2024 Rivian R1T
• 2024-2025 Tesla Model 3
• 2024-2025 Tesla Model X
• 2024-2025 Tesla Model Y
• 2024 Volkswagen ID.4

These are the plug-in hybrids that still qualify for a one-time tax credit:

• 2024 Audi Q5 e quattro PHEV: $3,750
• 2024 Chrysler Pacifica PHEV: $7,500
• 2024-2025 Ford Escape Plug-in Hybrid: $3,750
• 2024 Jeep Grand Cherokee 4xe: $3,750
• 2024 Jeep Wrangler 4xe: $3,750
• 2024-2025 Lincoln Corsair Grand Touring: $3,750

Source: fueleconomy.com