General Motors has suddenly reversed its decision on its extension to continue offering the $7,500 federal EV tax credit after the deadline passed on September 30, 2025, abandoning a program that would have allowed dealers to continue to offer the incentive through leasing programs. The automaker had earlier joined Ford in announcing a strategy to buy EVs through their financing units and qualify for the tax credit that creates savings that can be passed on to customers.
Political pressure on GM to drop tax loophole
Republican Senator Bernie Moreno pushed for closing the loophole that led to the $7,500 credit extension via a leasing arrangement that prompted GM’s sudden policy reversal. The company had planned to purchase EVs through its financing division, which would qualify for the federal tax credit, and then use the money to extend incentives to customers leasing vehicles.
GM spokesperson acknowledged that the company “worked on an extended offer for the benefit of our customers and dealers,” but decided that it didn’t claim the tax credit after further consideration. The automaker made this determination even though it initially embarked on a plan to assist customers and dealers as they transitioned through the post-deadline reality.
Limited-time company funding is replacing federal incentives
GM will contribute some $6,000 of its own resources to help keep the lease terms competitive through the end of October. The automaker said that this self-funded incentive is a short-term solution as the company reviews the long-term pricing for its growing EV lineup. GM will now offer about $6,000 from its own coffers for a limited period of time to support electric vehicle leases through October.
Despite the headwinds, EV car sales hold strong momentum
The news comes after GM’s record-breaking third quarter, providing over 66,500 electric vehicles and making the Chevy Equinox EV America’s bestselling non-Tesla electric vehicle. Through September, GM sold 144,668 EVs, more than doubling the performance over the same period for the previous year.
GM’s overall EV portfolio has continued to increase market share against incumbents, and Cadillac emerged as the leading luxury EV brand in Q3 on a global basis. The sub-$35,000 launch price tag of the Equinox EV and its subsequent popularity show that the consumer demand for affordable EVs exists.
New affordable models pledging to compete
GM also has more competition forthcoming in the form of the lower-priced EVs, such as the redesigned Nissan LEAF, beginning under $30,000 in 2026. The company is gambling on more affordable models, such as the 2027 Chevy Bolt, to retain its competitive standing in the changing market.
Industry divergence on tax credit extension plans
While GM disbands the extension of its tax credit program for it, Ford, Stellantis, and BMW continue their plans to extend credits for EV leases for several months. This divergence points to divergent ways of strategically addressing the management of the shift away from federal incentives.
The automotive industry now must navigate a world where government support is dwindling, and consumer demand for electric vehicles continues to increase, and manufacturers will need to create sustainable pricing strategies that do not rely on federal government support. GM’s decision against the EV tax credit extension is indicative of the complex considerations of politics and business in the rapidly evolving electric vehicle market.
While the company’s record EV sales show a positive sign of popularity with consumers, the change from federal incentives to self-funded programs marks a new milestone in EV adoption. GM’s $6,000 incentive, running through October, only temporarily gives the automaker breathing room as it develops long-term competitive strategies. Success, however, will ultimately depend upon hanging affordable, compelling electric vehicles out to compete without the help of government support in an increasingly crowded marketplace.