JD Power Study Shows Why Trump Is Killing The EV Tax Credit – Most EV Buyers Were Only Looking For Free Money From The Fed

President-elect Donald Trump’s transition team is reportedly planning to end the $7,500 federal Clean Vehicle Tax Credit in 2025. The subsidy, which was always meant to be temporary, was a signature component of the Biden administration’s Inflation Reduction Act and has played a key role in helping to lower EV prices and spur new sales. How will ending the subsidy affect future EV sales?

The Alliance for Automotive Innovation suggested that ending the EV tax credits would harm the auto industry, writing in a Nov. 12 letter to President-elect Trump: “To remain successful and competitive, the auto industry needs a stable and predictable regulatory environment,” adding that “these incentives help ensure the U.S. continues to lead in manufacturing critical to our national and economic security.” Tesla CEO Elon Musk told investors in a July conference call that ending the EV tax credit “would be devastating for our competitors and for Tesla slightly. But long-term [it] probably actually helps Tesla, would be my guess.” The other major EV manufacturers have yet to comment on the news.

This E-Vision Intelligence Report dives into key data points trending in each monthly J.D. Power EV Index update, along with other data points gathered from J.D. Power studies and pulse surveys, to offer a data-driven consumer perspective on the federal Clean Vehicle Tax Credit and its influence on EV purchase intent among different brands.

Majority of Premium EV Owners Factor Tax Credits into Vehicle Selection

To gauge the influence of various features and incentives on EV purchase decisions, J.D. Power asks respondents to its U.S. Electric Vehicle Experience (EVX) Ownership StudySM to select primary reasons for selecting the vehicle they purchased. In the premium vehicle segment—which includes all Tesla models—64% of EV owners say tax credits and other incentives influenced their purchase decision. In the mass market segment, 49% of EV owners were influenced by tax credits and incentives. Notably, these totals are higher than even vehicle purchase prices and lease offers, which were cited as a purchase reason by just 36% of premium and 39% of mass market EV buyers.

JD Power Study Shows Why Trump Is Killing The EV Tax Credit – Most EV Buyers Were Only Looking For Free Money From The Fed

Industry-wide, 97% of those leasing new EVs and 81% of those purchasing new EVs received the federal Clean Vehicle credit in 2024, for a total of 87% of total EV sales. That total is down from 88% in 2023 and up from 23% in 2022.

Clean Air Credit is a Big Deal for Tesla Buyers

Breaking down the data further into brand-specific results, the influence of federal tax incentives on EV purchase decision varies considerably by brand. Volkswagen tops the list of brands for which owners say tax credits and other incentives were a key reason for choosing that brand. All told, 81% of Volkswagen EV buyers chose their vehicle due in part to the Clean Vehicle Credit. Chevrolet ranks second, with 77% of buyers choosing the brand based on tax credits, followed by Tesla, with 72%. It is noteworthy that Tesla ranks highest among premium segment brands in terms of the influence of tax credits on purchase decision.

YTD Retail Share by Fuel Type

At the opposite end of the spectrum, Toyota EV buyers are least heavily influenced by tax credits and incentives, with just 21% of buyers selecting tax credits as a reason for choosing the brand. Toyota is followed by Kia with 24% and Hyundai with 32% of buyers making their vehicle decision primarily based on tax credits. It is important to note here that, to qualify for the Clean Vehicle Credit, purchased EVs must be assembled in North America (including Canada and Mexico) and at least 50% of its battery components must be produced or assembled in North America. This eliminates credits for vehicles assembled elsewhere, including popular EV models from Hyundai, Kia and Toyota. Leased vehicles, however, are not subject to the same standard, which allows auto dealers to pass along a $7,500 tax credit to all EV lessees, including those from Hyundai, Kia and Toyota.

Show Me the Money

It has been widely reported that the Clean Vehicle Credit is confusing for many consumers. While nearly all leases now receive the full credit, the requirements for a purchased vehicle to qualify include understanding where battery components are sourced and assembled, income limits of the purchaser, and several other detailed criteria. All told, 43% of EV shoppers say they would describe their understanding of current EV incentives as “vague,” “minimal” or “don’t know.” Just 17% say they have a “strong” understanding of EV incentives.

In terms of the bottom-line value of EV tax credits and incentives, the average EV lessee received $6,696 and the average EV purchaser received $4,257[1] in cash back due to the Clean Vehicle Credit in 2024. Those figures have gained steadily during the past three years.

EV Lease Volumes

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