By Summer Ballentine, The Detroit News
Michael MacGillivray had planned for months to replace his gas-powered Ford Bronco with an electric vehicle.
As a certified public accountant, he followed congressional debate over President Donald Trump’s sprawling spending and tax legislation, which would end $7,500 tax credits for some first-time EV buyers. When Trump signed the legislation into law July 4, MacGillivray knew he needed to act.
“I was leaning toward the EV regardless, but the tax credit pushed me over the edge,” MacGillivray told The Detroit News while driving his new Tesla Model Y back from a road trip to Toronto.
The 25-year-old Ann Arbor resident is among a surge of what analysts call “fence sitters” buying EVs in the final weeks before the tax credit expires Sept. 30. And automakers are taking advantage of the short-term boost to clear inventory in anticipation of at least a temporary drop in interest once the credits end.
Hyundai’s electrified sales jumped 50% compared to July 2024. Combined sales of electrified Toyota and Lexus models rose 6.7% to 90,426. July was General Motors Co.’s best-ever month for its electrified fleet, according to the company, which said it sold more than 19,000 EVs, a 115% increase from July 2024.
“Everybody wants them right now before the tax credits go away,” said Walter Tutak, dealer trade inventory manager at Champion-Hargreaves Chevrolet dealership in Royal Oak.
Honda Motor Co. reaped a record July in electrified sales, in part because “the impending expiration of EV tax credits led some buyers to pull ahead across the industry,” Jessika Laudermilk, assistant vice president of U.S. sales at Honda, said in an email. The automaker’s Prologue EV recorded 6,318 sales in July, up 82.7% year over year.
“We expect to see this continuing in August and September,” Laudermilk said.
Automakers are not required to report monthly sales, and Tesla Inc. did not disclose data in response to a Detroit News inquiry.
Stellantis NV, which also did not report July sales data, is one of many automakers offering aggressive incentives on both EVs and plug-in hybrids, along with prominent language on its brand sites trying to spur customers into action: “Get your EV incentive while you can!” Jeep says on its website in a promotion for the all-electric Wagoneer S.
“Brands are going crazy with incentives, and it’s good for consumers,” said Lauren Fix, CEO of the consulting firm Automotive Aspects.
Auto reviewer Anton Wahlman, a former technology analyst, said the next few weeks will be “an inventory cleaning event.”
Sam Fiorani, industry analyst at AutoForecast Solutions, said manufacturers will compensate for the loss of the EV tax credit with their own incentives to keep prices stable: “It’s unlikely that you’ll see the prices drop, but you will see leasing deals or customer rebates.”
Analysts expect manufacturers to further scale back production of EVs to match limited interest among buyers, especially as Trump works to remove federal emissions requirements that pressured companies to make those models regardless of market demand.
Stellantis has already started dialing back production of its electrified offerings, with dealers prevented from ordering several models.
“In line with our retail priorities and the plans shared with our dealer network, we are working to ensure our production plan is in line with consumer demand,” according to a statement from the company.
After the industry more broadly scales down production over the course of several years, “they’re only going to sell some of them if they can make money on them,” Wahlman said.
“So there will be far fewer models and they will be priced much higher,” he said.
“In the midterm, you’re going to see EVs disappearing from the marketplace,” Fiorani added. “Currently, they’re encouraged by emissions (regulations) and by the federal incentives, but once those two things go away, then there’s no real incentive for a manufacturer to add a new model to the lineup in a market that’s already crowded with EVs.”
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Automakers say they remain committed to EVs in the long run, although many are shifting investments toward hybrids and gas-powered, money-making trucks and SUVs.
“Toyota’s commitment to vehicle electrification is just one important element of its effort to help the world build a zero-carbon future,” Toyota Motor North America spokesperson Derrick Justin Brown said in an email. “Through the current industry shifts, including those around EV tax credits, that commitment remains strong, and there are no current plans to alter our approach.”
Laudermilk said Honda views electrification as “a marathon, not a sprint.”
“We remain focused on expanding our electrified lineup, utilizing our flexible manufacturing to produce ICE, hybrid-electric and battery electric models on the same production lines to meet the needs of our customers,” Laudermilk said.
GM executives have said the company will continue to pursue EV innovations, even as it beefs up its gas-powered fleet with investments at Orion Assembly in Michigan, Tonawanda Propulsion in New York and Toledo Propulsion Systems in Ohio.
Ford Motor Co. last year canceled plans to produce a three-row, battery-powered SUV at its Oakville Assembly Complex in Ontario, planning instead to build gas-powered Super Duty pickups there starting next year. And the Dearborn automaker this month delayed the launch of its next-generation electric van and electric full-size pickup, though it also said it would invest $2 billion to build a midsize electric pickup at Louisville Assembly.
Stellantis this summer announced plans to bring back 5.7-liter Hemi V-8 engines in Jeep SUVs and Ram light-duty pickups as Trump and a GOP-controlled Congress slashed emission and fuel economy standards that had forced the engine’s slow demise in the first place.
Despite the more favorable regulatory environment for gas engines, Fiorani said automakers neglect electrification at their peril.
“A good manufacturer will see that this is the wave of the future and will invest in it,” he said. “A short-term manufacturer will go back to building just ICE vehicles and ignore the future of EV.”
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