Why this may be the best time to buy an electric car

Get them while they last, people.

Currently, several 2004 and 2005 all-electric vehicles remain eligible for a one-time federal tax credit of $7,500, which can either be deducted from that year’s tax bill for 2024 or collected in advance as part of the transaction.

While the credit is limited to electrified trucks, vans and SUVs priced less than $80,000 and passenger vehicles with an MSRP not exceeding $55,000 that exceed specified domestic content and assembly quantities (and the Buyers are subject to income limits), many brands have implemented workarounds to level the playing field. Cashback rebates of up to $8,250 for the Kia EV9 are aplenty, with many automakers also including the full tax credit in electric vehicle leases as part of a loophole in last year’s Inflation Reduction Act.

Additionally, some qualified plug-in hybrid (PHEV) models are eligible for federal tax credits ranging from $3,750 to $7,500, which can also be used as an upfront rebate for eligible buyers.

Additionally, electric vehicle buyers in the used car market can benefit from a tax credit of up to $4,000 or 30 percent of the transaction price of a used model, whichever is less. To qualify, the vehicle must have had only one owner and must have been purchased from a dealer; Assembly or parts procurement does not apply here, but the buyer’s income limits apply.

But not only is the future of electric vehicle tax credits in question, but also the future costs of battery-powered vehicles. Donald Trump has made it clear that he is not a fan of electric vehicles. In previous speeches, he has derided the loans and promised to cancel them, although Tesla CEO Elon Musk is now convinced that stance could soften by the time the president-elect takes office.

Perhaps more importantly, Trump has pledged to impose a series of tariffs that could drive up prices not just for electric vehicles but for virtually all cars, trucks and SUVs sold in the United States. First, he proposes an additional 10% tariff on goods coming from China, where a large number of critical auto components are sourced.

Perhaps more effective would be a proposed 25% tariff on goods crossing the border from Mexico and Canada. Many models, including the heavy-duty versions of the Ram pickup and certain versions of the Chevrolet Silverado, are built in Mexico. Likewise, several key models originate from Canada, with some vehicles and/or components sometimes crossing multiple borders for components and assembly en route to U.S. showrooms.

If they come into effect, manufacturers would most likely pass on some or all of the additional costs resulting from the tariffs to consumers, which could have devastating consequences for the new vehicle market, which is already plagued by affordability issues.

Although the idea behind the proposed tariffs is to boost domestic production of cars and other products, the fact is that it would take years – perhaps longer than Trump would remain in office – to build domestic factories and recover from the to withdraw from the global market to produce these countless components that go into building a car, truck or SUV from the ground up.

In any case, with rising prices across the board and especially the questionable tax credits for electric vehicles possible, analysts are predicting a small boom in electrified vehicles before launch day. “There is concern that federal tax credits for electric and PHEVs could be reduced or eliminated when the new administration takes office,” says Charlie Chesbrough, senior economist at Cox Automotive. “As a result, electric vehicle sales could see some tailwinds , which would lead to robust activity through year-end.”

Currently, buyers can take advantage of year-end discounts and other electric vehicle specials – including Ford’s current free home charging and installation offers for its F-150 Lightning and Mustang Mach-E models. The bargains are likely to be particularly rich on last year’s models, which can still be found at dealers. And that’s in addition to the deep cash discounts, affordable financing offers and discounted leasing contracts that are commonplace in this segment.

In short, it seems that the coming weeks could be the best (and perhaps last) time to buy an electric vehicle at an affordable price.

Electric vehicles and PHEVs are eligible for federal tax credits

As a reminder, these are the 2024 and 2025 model year all-electric vehicles that continue to be eligible for the one-time $7,500 federal tax credit, subject to pricing restrictions:

• 2024 Acura ZDX
• 2024-2025 Cadillac Lyriq
• 2024-2025 Chevrolet Blazer EV
• 2024-2025 Chevrolet Euinox EV
• 2025 Chevrolet Silverado EV
• 2024-2025 Ford F-150 Lightning
• Honda Prologue 2024
• 2024 Nissan Leaf/Leaf SV Plus
• 2024 Rivian R1S
• 2024 Rivian R1T
• 2024-2025 Tesla Model 3
• 2024-2025 Tesla Model X
• 2024-2025 Tesla Model Y
• 2024 Volkswagen ID.4

There is also a one-time tax credit for these plug-in hybrids:

• 2024 Audi Q5 e quattro PHEV: $3,750
• 2024 Chrysler Pacifica PHEV: $7,500
• 2024-2025 Ford Escape Plug-in Hybrid: $3,750
• 2024 Jeep Grand Cherokee 4xe: $3,750
• 2024 Jeep Wrangler 4xe: $3,750
• 2024-2025 Lincoln Corsair Grand Touring: $3,750

Source: Fueleconomy.com