Ford and GM Discovered a Smart Loophole to Maintain the EV Tax Credit | Carscoops

      The companies have ingeniously managed to fund their own EVs, thereby securing the tax credit.

      Ford and GM discovered a loophole that allows them to extend the EV tax incentive.

      By making down payments on EVs, they effectively paused the countdown, ensuring that customers can take advantage of the incentive while supplies are available.

      The clean vehicle tax credit is set to expire today; however, Ford and General Motors have located a workaround that allows them to continue offering the incentive for a bit longer. This strategic decision is advantageous as it can save customers significant amounts of money while enabling the manufacturers to provide discounts that competitors can’t match.

      As previously reported in August, the IRS provided new instructions regarding the tax credit's expiration, which indicated that the credit could be prolonged for vehicles delivered after September 30, provided there was a “written binding contract” and a minimal payment was made.

      A Timely Loophole

      According to the Detroit Free Press, Ford and GM seem to have exploited this situation by using their financing divisions to make down payments on EVs. This approach has secured the tax credit and effectively paused the expiration.

      Thanks to this smart accounting strategy, the companies can continue to sell vehicles with the incentive. While the details are somewhat unclear, the publication noted, “When a customer leases an EV through the program, their payment reflects the application of the tax credit, and the finance company receives reimbursement.”

      What It Means for Buyers

      Ultimately, the specifics are less important to consumers as long as they receive their $7,500 credit. A GM representative indicated this by telling the paper, “It’s business as usual for the customer,” and “They can come in on Oct. 1 or Oct. 31 and lease an EV to benefit from the credit, provided the dealer is involved in the program and has inventory available.”