Electric vehicle sales are up as $7,500 tax credit nears end, but future's uncertain

With the loss of a generous federal tax credit for electric vehicles by month’s end, Long Island car dealers are ramping up sales and pondering ways to keep the market robust in the future.

The Trump administration’s "Big Beautiful Bill" did away with the $7,500 tax credit for EV sales and leases by Sept. 30, so dealers have less than two weeks to get the most from the incentive. Total registered EVs on Long Island now number 82,000, a big jump from just 10,000 in 2018, according to state figures. Whether that momentum continues beyond September is anyone’s guess.

"We’re telling people to buy now," said Tim Coppola, a lease manager for Hassett Ford, Lincoln, Subaru in Wantagh. He said he’s seen sales of the popular Mustang Mach-E double this summer for a car that has already been among the most popular EVs, but he’s not sure what will happen once the credit disappears. "Nobody has found a solution to keep the prices low," he said.

Rosemary Mascali, executive director of Drive Electric Long Island, an advocacy group, said sales of EVs on Long Island topped more than 2,000 for the month of July, compared with a typical 1,000 to 1,500 in a month. She said her group is doing "a ton of events" to keep the momentum going into fall. But she has many questions about what could keep the industry moving beyond credits that can make up a quarter or more of the cost of a car.

"We had a big month in July and I’m expecting there was a big jump for August and probably a really big month in September," she said. Much will be determined by what carmakers do to sell off existing inventory beyond month’s end to make space for the next generation of EVs, she said.

"We don’t know until the tax credits expire whether manufacturers will adjust their prices," Mascali said. "If they have inventory, I think they will. We are already seeing a lot of deals on leasing and purchasing, on top of the $7,500."

Sean Tucker, managing editor of Kelley Blue Book, which tracks vehicle sales, said sales of new EVs across the country were up 26.4% in July, the most recent month for which sales are available. He expects similar figures for August and September, then a dramatic change. "We’re expecting a spike in the third quarter, and then a dramatic drop off in the fourth quarter."

That said, Tucker said he’s "reasonably confident" some manufacturers will introduce incentives to extend the momentum. But one problem is "a lot of people who would be shopping at the end of the year are shopping now," creating a potential dearth of end-of-year shoppers.

States could step in to keep sales moving. California, he said, is considering offering a rebate or tax credit to replace the $7,500 federal credit, and New York still offers a rebate of up to $2,000.

PSEG Long Island, which manages the grid for LIPA, in a statement said it supports EV owners with a $200 rebate for qualifying EV chargers and "a voluntary time-of-day rate that offers deep discounts for usage of energy between 10 p.m. and 6 a.m. every day" to cut costs of charging. 

Longer-term impacts are expected, according to a study this week by Ernst & Young Global, which now predicts battery-powered cars will account for half of all U.S. car sales by 2039 — five years later than previously projected, Newsday has reported, citing a Bloomberg News report. 

But others say the market for EVs is so well established that there's no turning back.

At King O’Rourke Auto Group in Smithtown, executive manager Jim Pflumm said electric vehicles already make up around half of monthly sales.

As such, he said, "We don’t think [loss of the federal tax credit] is going to have a big impact on overall sales." For one thing, the credit doesn't apply to SUVs, trucks or vans costing more than $80,000 (or sedans and smaller vehicles over $55,000).

Pflumm said he expects manufacturers will respond: "I think they are going to lower the pricing of vehicles quite a bit and will build more moderately priced vehicles."

He’s seen a 10% to 15% uptick in EV sales over the summer, in part because discussion of the credit’s expiration "has perked people’s curiosity and they came in and looked at the opportunity of driving an EV."

The reasons are many: no more gas lines, no oil changes, range up to nearly 400 miles. O’Rourke even has a full-service van that can handle most needed repairs or maintenance of EVs at customers’ homes or office, and an EV-equipped tow truck.

"When they buy an EV, our customers are not going backward" to internal combustion engine vehicles, Pflumm said. "We embrace the EV — it’s already 50% of our sales. We are not thinking [loss of the tax credit] is going to be an issue."

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.