On Oct. 1, 2025, the electric vehicle (EV) tax credit was eliminated by President Donald Trump’s One Big Beautiful Bill Act (OBBBA). The massive bill sets the spending agenda and tax policies for the remainder of Trump’s second term, permanently extending most of the tax rates of the president’s 2017 tax bill and paying for those tax cuts by eliminating spending elsewhere (such as the EV tax credit). Find out below if EVs are still worth buying without the tax credit.
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What Is the EV Tax Credit?
Part of the Inflation Reduction Act (IRA) of 2022, the EV tax credit incentivized new car buyers to purchase EVs by giving them a $7,500 tax credit when buying a qualifying new EV. For instance, a new $40,000 EV would ultimately cost $32,500 after the $7,500 was claimed. It was a healthy incentive, covering a significant portion of a new EV’s final cost. That incentive has now been eliminated by the OBBBA.
That’s not the only pricing issue currently facing EVs.
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Tariffs Are Keeping EVs Expensive
As reported by Business Insider, even the standard versions of Tesla’s Model 3 and Model Y are no longer cheap at $36,990 and $39,990 respectively. A crucial reason for this is that many of the necessary minerals needed to construct EV batteries are both mined and processed in China, where they face a 93.5% tariff tax to come to America.
Imposing not only a steep tariff but also one with unpredictable terms makes planning extremely difficult, Travis Fisher, director of energy and environmental policy studies at the Cato Institute, told Business Insider. He also said if he were in the auto industry, considering production of electric or hybrid models and the integration of multiple batteries, he’d be unsure how to proceed.
Experts Weigh In: Are EVs Still Worth Buying?
Should you still consider an EV, even without the tax credit? According to Dave Thomas, director of content marketing and auto industry analyst at CDK Global, the answer is a hesitant yes. “If you are truly concerned [about] how much you will be paying out of pocket for the next five years, EVs will mostly likely still be the right pick,” he said.
“Many [automakers] are discounting EVs by $7,500 to offset the loss of the incentives. If you search your local dealership’s inventory you might find some with significantly bigger discounts,” Thomas explained.
“EVs in general have far lower resale value than traditional gasoline or hybrids. Buyers who trade in a car every three to five years won’t see as much return as someone who owns their EV closer to 10 years, when the depreciation hit won’t be as bad,” he added.
If you’re willing to view an EV as an investment (both for your wallet and for the environment), they’re likely still worth it.
Editor’s note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: Expert Shares Whether EVs Are Still Worth Buying Now That the Federal EV Tax Credit Is Gone
