Federal tax credits for electric vehicles are expiring Tuesday night, after a Republican tax and spending bill eliminated them several years earlier than they were originally set to end.
For Jesse Lore, the owner of Green Wave Electric Vehicles in North Hampton, that means September has been busy. On Monday night, with a little over 24 hours left until the tax credit deadline, he was juggling several customers.
“It's crazy, and the phone doesn’t stop ringing, but that’s a good thing,” he said. “Make hay while the sun is shining.”
Until Tuesday night, EV buyers could get a tax credit for $4,000 on a used car and $7,500 on a new car. As those credits drew closer to expiring, electric car sales accelerated across the country.
Lore says his business has seen about a 70% increase in September sales over last year. But come Wednesday, all the cars on his lot under $25,000 — the maximum price for the used EV tax credit — will get more expensive. And lots of people bought cars ahead of the deadline. Lore expects the combination of those factors to pump the breaks on his sales.
Green Wave, like other dealers, offered the tax credits as “cash on the hood,” selling cars for a discounted price and then getting reimbursed by the federal government. But in recent weeks, Lore says those payments have been stalled.
“We're still out well over $100,000 in terms of cash that we have not been paid on. And that's a lot for a small business,” he said.
Lore said his team discussed whether to stop offering the credit and ask their customers to file for it themselves. But ultimately, they decided to keep selling cars for the discount until the deadline.
“We believe that the law is clear. We believe that we will get paid,” he said.
As tax credits wind down, Lore says there may be an unexpected silver lining. Traditional dealerships may buy fewer electric vehicles, causing wholesale prices to drop.
“There's a lot of fierce competition in the marketplace for car sales,” he said. “As wholesale prices go down, so too will retail prices.”
Lore says that price drop won’t make up for the loss of the credits, but could help consumers a little. And, he said, he’s hoping decreases in development costs and batteries will drive the cost of electric cars below gas cars over the next decade.
“That’s coming up,” he said. “But today it’s not necessarily there.”
