US Senate wants to end EV tax credit even earlier

In the US, voting on Trump’s $4.5 trillion tax cut bill is entering its final phase. The US President has demanded that Congress send him the more than 900-page bill ready for signature by 4 July, meaning this week. On Saturday evening, following hours of negotiations, the Senate held a crucial test vote, but further closed-door meetings followed.

What is clear is that the end of the EV tax credit is virtually sealed – the only question is when it will expire. The programme, known as the ‘Clean Vehicle Credit’, has so far guaranteed buyers of electric vehicles in the US a tax break of up to $7,500. There are now competing proposals on how to remove this incentive.

A draft passed by the House of Representatives in May would allow the credit to continue until the end of 2025, with an exception for carmakers that have not yet sold 200,000 EVs. Their vehicles would remain subsidised until the end of 2026. The Senate, however, has its own ideas, particularly regarding timelines, consumer eligibility, and exemptions.

In mid-June, the chamber proposed that the tax credit for new vehicles should expire 180 days after the law takes effect (around six months). For used electric vehicles, 90 days were proposed, while for leased vehicles not assembled in North America, the benefit would end immediately.

Now, Senate Republicans have presented a further revised version, under which the $7,500 tax credit would end on 30 September 2025 – applying equally to new and used vehicles (the latter are currently eligible for up to $4,000). As Republicans hold the majority in the Senate, the proposal will likely pass.

However, the tax cut bill as a whole, which remains controversial even within the party, will go to a vote, and Republicans cannot afford many defections in their own ranks. The House of Representatives will also have to vote again on the latest version before it can be sent to the White House for signature.

Tesla boss Elon Musk, recently aligned with Trump, attacked the bill on his social media platform X, claiming it would destroy millions of jobs in the US and give “handouts to industries of the past while severely damaging industries of the future”.

He is referring not only to EV subsidies being scrapped but also to Trump’s desire to make combustion engine vehicles more attractive again. The new Republican bill includes a provision to scrap penalties carmakers face for breaching average fuel consumption standards.

However, Senate Republicans have abandoned their ambition to block the USPS’s EV plans, according to Reuters. The postal service had warned that scrapping its electric vehicles would cost $1.5 billion.

Update 2 July 2025

The US Senate has passed the major tax and spending package that would end federal tax credits for electric vehicles from 30 September. The legislation, championed by President Trump, eliminates the $7,500 credit for new EVs and the $4,000 credit for used EVs. The bill, approved 51-50 with Vice President JD Vance casting the deciding vote, now heads to the House. If signed into law, it would revoke a key incentive underpinning the Biden-era Inflation Reduction Act, which extended EV tax credits through 2032.

According to US media, experts warn that the change risks slowing EV adoption just as their upfront cost approaches that of petrol cars. In May, the average new EV sold for $57,700 before subsidies, compared to $48,100 for combustion cars, NBC reports. Ingrid Malmgren from Plug In America urged swift purchases: “This is going to be the summer of the EV, because come the end of September those credits will be gone.” State and local EV incentives remain available. At the end of last year, for example, California said that it would reinstate its own subsidy programme, if the federal tax credit were to be cut.

reuters.com, budget.senate.gov (PDF, Seite 499), bloomberg.com (Musk), nbcnews.com (update)