The Internal Revenue Service is giving electric vehicle shoppers more time to qualify for the $7,500 federal tax credit, easing concerns that deliveries delayed beyond September would make them ineligible.
The credit, set to expire Sept. 30 under current rules, will now apply to vehicles purchased through a binding written contract before the deadline, even if the vehicle is not delivered until later. The clarification means consumers can place a small down payment or trade-in, sign purchase documents, and still secure the credit despite supply or shipping delays.
Industry analysts say the decision could provide a crucial boost for battery-electric vehicle sales heading into the fourth quarter. A joint study by researchers at the University of California, Berkeley and Duke University had warned that the loss of the credit would result in a 27 percent drop in BEV registrations next year, equal to about 317,000 vehicles.
Automakers with multiple qualifying models, including General Motors and Tesla, are expected to benefit most from the IRS move. GM currently has six battery-electric models eligible for the credit, while Tesla has four. Other brands such as Hyundai, Honda, and Volkswagen also stand to gain as buyers can lock in incentives on vehicles that may not be available for immediate delivery.
The IRS said a vehicle is considered “acquired” at the time of a binding contract and payment, not when the car is driven off the lot. That interpretation effectively extends the window for consumers to claim credits and helps prevent the market disruption many dealers feared in late September.
The extension may also help smooth demand fluctuations. Without the ruling, automakers and retailers expected a sales surge in the final days of September followed by a sharp decline in early October. By allowing transactions to count regardless of delivery timing, the Treasury Department has given the industry more flexibility to manage inventory and production.
The clarification comes at a critical time for automakers investing heavily in electrification amid softening consumer demand and tariff-related cost pressures. While the long-term outlook for BEV adoption remains uncertain, the IRS action is expected to help sustain momentum in the short term.