by End of Federal Electric Vehicle Tax Credit
This week marks the end of the federal electric vehicle tax credit. This change could impact both buyers’ wallets and dealerships’ financial performance. However, for many dealers, financial difficulties began several weeks ago due to delays in the IRS approval process, which slowed down reimbursements. Because of this, some dealers are even delaying vehicle deliveries until they receive the money.
Key Highlights of the Situation
Mechanism of Receiving the Incentive
The vast majority of eligible buyers of new and used electric vehicles receive the credit as an upfront discount at the time of purchase. Typically, dealerships advance these funds themselves after receiving online approval from the IRS. The IRS then has the task of reimbursing the funds to the dealers.
Delays in the System
According to several dealers who spoke with CNBC, this process previously took only a few days. Now, many dealers are left without funds for two weeks or more, not receiving reimbursement from the IRS. For dealers selling dozens of electric vehicles with the tax credit, this quickly accumulates into significant amounts.
Jesse Lore, founder of Green Wave Electric Vehicles in New Hampshire, reported that the dealership has already spent about $100,000 on paying out the incentive at the point of sale but has not yet received reimbursement from the IRS. Lore added that approximately a dozen applications submitted to the IRS since September 15th are still pending.
“I know for a fact that some dealers are saying, ‘We won’t do this anymore. We are not getting paid.’ Others are informing customers, ‘We are holding the cars, and you won’t be able to take it home until we are paid in full,'” stated Lore.
Financial Implications for Dealers
Gary Pretzfeld, co-owner of AutoTrust USA in Florida, added that he has already paid out $80,000 to $90,000 in discounts and is still waiting for payment from the IRS. A representative from the National Automobile Dealers Association (NADA) informed that the organization is aware of the delays.
“Based on unconfirmed reports, we have heard that some dealers are reporting that recently submitted applications have been pending since last week,” the representative said. “NADA has been and continues to work with the IRS and the Treasury Department regarding the portal, and they are being cooperative.”
Reasons for the Delays
What exactly is causing the slowdown remains unclear. Some dealers explain it by the IRS being overwhelmed with paperwork, citing staff reductions and increased electric vehicle sales. Others lean towards a more conspiratorial view, suspecting that the slowdown might be an intentional tactic by the Trump administration to reduce electric vehicle sales.
A White House representative stated that all valid electric vehicle tax credits submitted by September 30th will be granted and paid.
Prospects for Resolving the Issue
Until this happens, many dealers will be living in a state of serious anxiety. Delays in reimbursement can temporarily affect dealerships’ liquidity, especially for those actively working with electric vehicles. It is expected that after the official end of the tax credit program, the situation may stabilize, but for now, dealers are forced to seek temporary solutions to support their operations. It is also important to consider that such delays could affect consumer confidence in the electric vehicle incentive program in the future.
