Automakers signal end of ‘irrational’ EV discounts after the deadline

End of irrational EV discounts

Automakers are signaling the end of “irrational” EV discounts, which are massive price cuts. This is happening because the federal EV tax credit of $7,500 expires on September 30, 2025. Automakers will stop overproducing electric cars by selling them at significant discounts to avoid losing money.​

The term “irrational discounts” was used by General Motors (GM) to describe the steep price cuts its rivals were using. GM’s senior vice president, Duncan Aldred, stated that many competitors were scaling back their EV products and plans, which should end this overproduction and the massive discounts.

EV sales boom before credit ends

The U.S. electric vehicle market saw record-setting sales in August 2025, with over 21,000 EVs sold by General Motors alone. This sales boom directly results from buyers rushing to get the federal tax credit before it ends. This shows how important the $7,500 incentive is for many customers.​

This rush to buy is expected to continue through September. However, a temporary slowdown in EV demand is expected once the tax credit is gone. The market will need time to adjust to the new reality where buyers can’t get that significant discount to lower the price.

The federal EV tax credit

The Clean Vehicle Credits created under the Inflation Reduction Act provided up to $7,500 for new EVs (30D) and up to $4,000 for used EVs (25E), with income and MSRP/price caps. For 30D, meeting only one of the battery component or critical mineral thresholds yielded $3,750.

Under recent changes, these credits (and the commercial lease credit, 45W) aren’t available for vehicles acquired after September 30, 2025, except where a binding written contract was signed beforehand.

GM’s production adjustments

General Motors (GM) is significantly changing its EV production plans in response to the expiring tax credit. GM has slowed parts of its EV rollout, including throttling Hummer EV output at Factory ZERO and pausing the Spring Hill expansion tied to Cadillac’s Escalade IQ and Lyriq, while re-timing other projects.

This is to avoid making too many cars that might not sell without the government discount.​ GM’s Duncan Aldred stated that the company won’t “overproduce” and that the EV market will likely be smaller for a while.

GM believes it can still grow its market share by being careful with production and focusing on its gas-powered cars, which still bring in a lot of money.

GM’s current EV incentives

Despite warning about the end of “irrational discounts” from rivals, General Motors has its own current incentives. The 2025 Blazer EV has a $3,500 discount, the 2025 Equinox EV has a $3,000 discount, and the 2025 Silverado EV has a $4,000 discount.​

These discounts are meant to attract buyers before the federal tax credit runs out. Cadillac EVs, however, do not have cash discounts. They offer a $2,000 “conquest lease” offer for owners of other luxury brands who switch to Cadillac.

Ford’s past EV strategy

Following GM’s statements, you can see that other automakers have also used similar strategies. For example, Ford has a history of using discounts and price changes to compete.

In 2023, after dropping the price of the Mustang Mach-E, Ford’s CEO Jim Farley said that EV prices were “the single most important thing” for getting more people to buy them.​

Ford has often adjusted prices and offered discounts on its EVs, like the F-150 Lightning, to keep up with rivals. This focus on pricing shows that automakers have known for a while that discounts are a powerful tool to attract customers.

Ford’s pivot to profitability

Ford is also changing its approach to EV pricing. The company announced that its EV business, Model e, lost about $4.7 billion in 2023 and around $5 billion in 2024. This massive loss is a primary reason for Ford’s shift away from significant price cuts and focusing on making a profit on each car.​

Ford’s CEO, Jim Farley, said the company would prioritize profitability over volume. Ford plans to focus on more popular and profitable electric trucks and vans like the F-150 Lightning and E-Transit. This new strategy aims to stop the kind of deep discounting that led to substantial financial losses.

Tesla’s pricing strategy

The “price war” Ford reacted to was started by Tesla, the biggest EV maker. In 2023, Tesla started a “price war” by cutting prices on its Model 3 and Model Y. Some models had their prices cut by more than 20%. This forced other automakers, like Ford, to lower their prices to compete.​

Tesla’s CEO, Elon Musk, has said that getting more people to buy EVs is more important than making a big profit on each car. This strategy of lowering prices to gain more customers is a big reason for the “irrational” discounts seen across the industry.

Tesla’s Model Y price cuts

The Tesla Model Y has seen some of the most dramatic price changes. In 2023, its price was lowered several times. By the end of the year, the Model Y’s starting price was almost $13,000 less than at the start of the year. This massive cut made it much more affordable for many buyers.

​These price changes show how much power Tesla has in the EV market. When they cut prices, other companies must follow suit or risk losing customers. This is a big reason why automakers like GM see the market as having “irrational” discounts.

Hyundai’s focus on affordability

Following the trends set by bigger players, Hyundai has also focused on affordability. Hyundai has been known for offering more affordable EVs, like the IONIQ 5. They have also used special pricing and incentives to make their cars more attractive.

Hyundai kept Ioniq 5 pricing competitive with $7,500 lease bonuses (a pass-through of the commercial credit). After U.S. production began, certain models also qualified for purchase credits under federal rules.​ By offering a more affordable model, Hyundai showed it understands that price is a massive factor for many buyers.

Hyundai’s IONIQ 5 discounts

The Hyundai IONIQ 5 has often had special deals to stay competitive. For a while, the IONIQ 5 did not qualify for the full federal tax credit because it was built in South Korea. This led to Hyundai offering significant lease incentives of up to $7,500 to compensate for the lost credit.​

These incentives were a clever way to keep the car’s price competitive in the U.S. market. By offering a discount equal to the tax credit, Hyundai could still attract buyers who wanted a good deal, even if they couldn’t get the federal money directly.

GM’s ultium battery advantage

General Motors is betting on its new Ultium battery platform to avoid future discounts. The company believes this technology will help it build EVs for less money in the future. By using a single type of battery for many different cars, GM plans to cut its production costs significantly.​

This new technology is a key part of GM’s plan to make EVs profitable. GM has targeted low- to mid-single-digit EBIT margins on EVs around 2025 as scale and Ultium costs improve. This shows that GM focuses on making money from each car, not just attracting buyers with huge deals.

The future of EV prices

As credits lapse, effective prices could rise by up to the value of the lost incentive on eligible models, though the impact will vary by brand and deal. The market will probably slow down as people get used to the higher prices without the government’s help.​

The end of the tax credit will also pressure automakers to make more affordable EVs without government help. It will be a test to see if people will still buy electric cars based on their features and price, rather than because of a considerable discount.

Global shift in subsidies

The U.S. is not the only place where government support for EVs changes. In 2024, global electric car sales went over 17 million, a 25% increase. The market grew the most in China, where sales topped 11 million cars.

​The global EV market is susceptible to government help. When the subsidies are gone, the market changes. For example, some European countries have reduced their subsidies, leading to a slowdown in their EV sales growth.

Wondering if the upgrade is worth the new cost? Take a look at the Subaru Outback, which sees a significant price jump for 2026.

The new EV market reality

As of September 2025, the EV market is changing from one driven by discounts to one based on the cars. The total number of electric cars on the roads reached almost 58 million by the end of 2024.​

The U.S. also saw sales increase to 1.6 million, but the growth was slower than in 2023. This shows that the market is becoming more mature. The end of the $7,500 tax credit is forcing automakers to make wise business choices and keep selling cars without the help of the big government.

Thinking about grabbing a luxury EV while it’s cheaper? Don’t miss some Mercedes EVs just dropped $15,000 in price.

What do these changes mean for your next car? Drop your thoughts below.

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This slideshow was made with AI assistance and human editing.