Legacy automaker General Motors (GM) has scrapped its plan to extend the $7,500 electric vehicle (EV) tax credit after its expiration last month. GM and peer Ford (F) were trying to take advantage of an IRS (Internal Revenue Service) rule that allowed taxpayers to book an EV and make a down payment on or before September 30, thereby qualifying for the credit even if they took delivery after the deadline. The strategy aimed to offset the impact of the expiring program, which has supported EV adoption for more than 15 years.
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GM has decided to cancel the plan and instead will offer its own incentive scheme for EV leases. The company plans to fund a $6,000 incentive through October 30. Automakers have faced criticism from lawmakers for leveraging the IRS rule to benefit company sales.
Here’s What GM Planned to Do Earlier
Under its initial strategy, GM’s financing arm, GM Financial, would purchase EVs from dealer inventories by covering down payments. This would allow loan providers to claim the $7,500 federal tax credit. Dealers would then offer standard lease terms to customers by factoring the $7,500 subsidy into lease pricing.
The program was designed to help dealers manage the loss of the tax credit and avoid unsold EV inventories. GM reportedly intended to claim the credit on 20,000 EVs at dealerships or in transit. However, following heightened backlash from Republican Senator Bernie Moreno of Ohio, GM dropped the plan.
Auto executives, dealers, and analysts anticipate a sharp decline in EV sales after the tax credit’s expiration. A last-minute surge from consumers seeking to benefit from the subsidy pushed EV sales to record highs in September. EV giant Tesla (TSLA) has already increased lease prices across all its EV models in the U.S. after the deadline. Ford has yet to decide whether it will continue claiming the $7,500 tax credit on leased EVs.
Is GM Stock a Buy, Hold, or Sell?
Analysts remain divided about General Motors’ long-term outlook. On TipRanks, GM stock has a Moderate Buy consensus rating based on 12 Buys, three Holds, and two Sell ratings. The average General Motors price target of $63.35 implies 12.3% upside potential from current levels. Year-to-date, GM stock has gained 6.8%.
