General Motors (GM) has ended a program that was built to keep its dealers offering a $7,500 federal tax credit on electric vehicle leases beyond the September 30 cutoff.
Instead, the company announced on Wednesday it would backstop lease deals with about $6,000 in support through its finance arm. The change followed the official expiration of the government subsidy that had fueled a rush of electric vehicle sales last month.
The scrapped plan was pulled together in the final days of September. General Motors had arranged for its lending unit, GM Financial, to buy EVs sitting on dealer lots and those still being shipped.
That would have allowed the company to apply for the $7,500 credit on each car and then pass that amount into customer lease terms through the end of 2024. GM said roughly 20,000 vehicles were covered under the plan before it was shelved.
General Motors drops plan after objections in Washington
The program came apart after Republican Senator Bernie Moreno of Ohio, who is a former car dealer now active in auto policy, raised concerns. The Senator’s objections were enough to push General Motors to retreat.
The company allegedly told Reuters in a short statement that: “After further consideration, we have decided not to claim the tax credit,” while declining to give further details.
GM Financial had already started making payments before the program was canceled for a straightforward formula 5% of the maximum sticker price for each eligible car.
For example, two Chevrolet Blazer EVs, each priced in the mid-$60,000s, qualified for a combined payment of around $6,300. Those funds were meant to flow into leases as a substitute for the federal tax credit.
General Motors confirmed it will “fund the incentive lease terms” through the end of October. This means dealers can still write leases with support worth close to $6,000 per car, though it falls short of the $7,500 that customers had received under the federal program.
The stopgap measure is temporary, giving customers only a narrow window to benefit. The plan was assembled in haste. Company officials held a call with dealers on September 29, just one day before the credit expired, to lay out details.
GM Financial would purchase cars in inventory so they would still qualify for the subsidy. Payments were quickly issued before the midnight deadline.
Auto industry executives and analysts have predicted that EV sales will take a hit now that the credit is gone. The last days of September saw buyers flood showrooms, rushing to lock in deals before the subsidy ended. That surge produced record electric vehicle sales for the month.
Dealers had been bracing for the fallout of the credit’s expiration, with many warning that once the subsidy disappeared, moving electric vehicles off lots would be much harder.
The dropped program was meant to soften that impact. By claiming the tax credit itself, the company could have prevented dealers from being stuck with unsellable EVs in a market already slowing.
Ford had already put together its own plan to manage the end of the federal subsidy, but it is not clear if that program remains active. The competition between the two automakers added urgency to GM’s scramble to put its deal in place before the September deadline.
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Source: https://www.cryptopolitan.com/general-motors-replaces-lost-7500-ev-credit/
