EV Buyers Rush to Beat Expiring $7,500 Tax Credit

Written by: Ronke Adepoju

August 13, 2025

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Deadline Sparks Record Sales

Electric vehicle sales are surging as consumers race to lock in federal tax credits worth up to $7,500 before they disappear on September 30.

A law signed by Trump in July will end these incentives – which apply to new, used, and leased EVs – months before the Biden administration’s Inflation Reduction Act had planned. Under that legislation, the credits would have remained available through 2032.

“We’re expecting Q3 may be a record for EV sales because of the tax incentives going away,” said Stephanie Valdez Streaty, senior analyst at Cox Automotive.

July Hits Record Highs

Cox Automotive data shows:

• 130,100 new EVs sold in July – the second-highest monthly total ever, just behind December’s 136,000.
• Sales jumped 26.4% from June and nearly 20% year-over-year.
• EVs represented 9.1% of all passenger vehicle sales in July, the largest share on record.
• Used EV sales also hit a milestone with 36,700 units sold – the highest monthly figure to date.

Standout Models

According to Liz Najman, director of market insights at EV marketplace Recurrent:

• Chevy Equinox EV sales reached 8,500 units in July – the highest monthly total for any non-Tesla EV in U.S. history.
• Honda Prologue and Hyundai IONIQ 5 also saw record-breaking demand.
• Tesla’s U.S. sales fell for a second straight quarter, down 12% year-over-year in Q2 and 9% in Q1.

Why the Rush?

The federal tax credits – up to $7,500 for new EVs and $4,000 for used EVs – are designed to make EVs more financially attractive. Analysts note:

• EVs generally cost more upfront, but are cheaper to own over time compared with gasoline cars.
• July’s average new EV price: $55,689 (before incentives). With the full $7,500 credit, that drops to $48,189 – roughly in line with the average gas car price of $48,078.
• Once the credits expire, EVs risk losing this price parity. Some states and utilities offer additional rebates, further narrowing the gap.
• The average transaction price for all new passenger vehicles (aside from battery electric vehicles) in July was $48,078, according to Cox data.
• The average for new EVs was $55,689, before any dealer incentives and tax credits, Cox said. If the purchase were to qualify for the full $7,500 tax credit, it’d be near price parity, around $48,189.

Dealers Turn Up the Heat

Automakers and dealerships are leaning into the deadline. Tesla’s website currently leads with: “$7,500 Federal Tax Credit Ending” and urges customers to “Take Delivery Now.”

To qualify, buyers must take ownership by September 30 – meaning the car must be in their possession and off the lot.

Beyond federal credits, dealers sweetened the deal in July with $9,800 in average additional incentives – about 17.5% of the average EV’s sale price, the highest since 2017.

What’s Next for the Market?

Analysts expect a sharp drop in new EV sales in Q4 2025 once the credits disappear. However, the used EV market could see faster growth as availability rises and price-conscious buyers shift focus.

Only about one-third of used EVs currently qualify for the $4,000 incentive, so the market is less dependent on federal subsidies.

The Wealth Break Takeaway

The race for EV tax credits is driving record-breaking sales – but the clock is ticking. If you’re considering an EV, September 30 is your hard deadline to lock in up to $7,500 in savings. After that, expect higher upfront costs on new models and a potential pivot toward used EV bargains.