GM & Ford Cancel Extension Of Federal $7,500 EV Rebates

It seemed like such a good idea, and really out-of-the-box thinking, but Ford Motor Co. and General Motors Co. have both canceled electric vehicle leasing programs that would have extended the benefit of a $7,500 federal tax credit that expired Sept. 30, following criticism from two Republican senators who accused the automakers of exploiting a “loophole” to continue claiming the subsidy.

GM ended its program on Oct. 8, and Ford followed a day later. The moves came after Sens. Bernie Moreno of Ohio and John Barrasso of Wyoming sent a letter to Treasury Secretary Scott Bessent alleging that the companies’ captive finance arms were using a technical interpretation of IRS guidance to keep the credit alive beyond its expiration date.

In August, the IRS said the credit could still be claimed if a vehicle was “placed in service” after September as long as payment had already been made before the deadline. The senators said Ford and GM were taking advantage of that rule by having their finance units make nominal down payments on EVs that were still in dealer inventory, effectively locking in the tax credits for those vehicles.

“This guidance, while well intentioned, is unfortunately being taken advantage of by certain car companies who wish to continue bilking the U.S. taxpayer,” Moreno and Barrasso wrote in their Sept. 30 letter. They claimed some automakers were entering into “binding agreements” with dealers to reserve the credits on vehicles that might not be leased to customers for months, calling the practice a “total violation of Congressional intent.”

Both automakers initially defended the programs, saying they were designed to help keep lease payments affordable after the loss of the credit, which had been an important tool for boosting EV adoption. Ford required its dealers to sign up by Sept. 26 and offered a $1,000 incentive for each qualifying EV lease completed by the end of the year. GM Financial used a similar structure to pre-purchase EVs in dealer inventory before the deadline, which would have enabled GM to pass along the credit value to customers leasing those vehicles later in the year.

After the senators’ letter and subsequent outreach to the Treasury Department, GM quickly abandoned the plan. “We’ve decided not to move forward with the program as initially structured,” a GM spokesperson said after the company’s Oct. 8 reversal. Ford followed on Oct. 9, announcing that it would maintain its discounted EV lease payments but without claiming the federal incentive.

“Ford will not claim the EV tax credit but will maintain the competitive lease payments we have in the market today to continue providing customers with more affordable electric vehicle options,” Ford spokesperson Said Deep said. “For customers who want to purchase an electric vehicle, Ford Credit continues to offer 0 percent financing for 72 months and other incentives.”

It remains unclear whether Ford will still provide the $1,000 dealer incentive promised under the original program. Andrew Frick, president of Ford Blue and Ford Model e, told Automotive News  just days before the reversal that the automaker had wanted to help dealers move remaining EV inventory after the credit expired. “We have a certain amount of inventory in the market, and we wanted to make sure that we were setting up our dealers for success to run out through the rest of the year,” he said Sept. 30 at a Detroit conference.

The quick collapse of both programs highlights the political sensitivity surrounding federal EV incentives and the growing scrutiny of how automakers apply them. The $7,500 credit—limited to vehicles that meet North American assembly and battery sourcing rules—has been a key driver of EV sales, but its expiration for many models has left carmakers seeking other ways to offset higher electric vehicle prices.

Leasing has been one of the few remaining paths for customers to benefit from the incentive, since the credit is claimed by the leasing company rather than the individual buyer. Many automakers had used that flexibility to keep lease offers competitive even on models no longer eligible under the stricter requirements.

The cancellations by Ford and GM are likely to put further pressure on other automakers that have used similar leasing strategies, as lawmakers signal an intent to close any remaining gaps in the tax credit program. For consumers, the result may be higher lease payments on electric vehicles heading into the final months of 2025, at a time when sales growth for EVs has already slowed and inventories have been rising.

Both companies said they remain committed to electric vehicles despite the setback. Ford continues to offer zero-percent financing and other deals on its Mustang Mach-E, F-150 Lightning, and E-Transit, while GM said it is evaluating other incentive programs as it prepares to launch several new Ultium-based EVs next year.

Still, the joint retreat from the leasing strategy signals a turning point for Detroit’s approach to navigating federal EV rules—one that underscores how political and regulatory friction can alter corporate incentive plans almost overnight.