In the wake of the US government's decision to end electric vehicle (EV) tax credits under the Inflation Reduction Act (IRA) at the end of September 2025, Detroit automakers General Motors and Ford Motor Company sought to keep the US$7,500 incentive alive through their own financing arms—only to face swift political backlash that forced an abrupt reversal.
Strategic maneuvering meets political resistance
The two automakers had aimed to preserve the federal subsidy by leveraging a loophole in IRS guidelines, initiating strategic financial maneuvering that immediately drew criticism from Capitol Hill. Republican Senators Bernie Moreno and John Barrasso accused the companies of exploiting the tax code and undermining taxpayer interests, publicly pressuring Treasury Secretary Scott Bessent to intervene.
Under mounting scrutiny, Ford announced it would stop applying for EV lease-related tax credits, though it pledged to maintain attractive leasing terms. Ford Credit will continue to offer 0% financing for up to 72 months along with other incentives. GM also stated it would no longer pursue the contested IRA credits, but will instead offer up to US$6,000 in cash leasing incentives—though only through the end of October 2025—to maintain sales momentum.
Supply chain insiders noted the collapse of the strategy underscored the volatility US corporations face when navigating a highly politicized policy landscape.
The loophole and its exploitation
The controversy stems from a change in US tax policy: starting September 30 2025, the US$7,500 EV credit for new vehicles was officially phased out, dealing a significant blow to a market that had relied heavily on government subsidies to stimulate demand.
According to sources familiar with the matter, both GM and Ford identified a potential loophole in IRS guidance, which stated that vehicles "acquired and paid for" before the September 30 deadline could still qualify for the tax credit—even if delivery occurred later.
In response, GM Financial and Ford Credit orchestrated a last-minute financing campaign. By front-loading payments on dealer inventory and taking early ownership of vehicles, the automakers were able to reclassify the cars as leased assets and pass the tax savings along to consumers. Ford even reportedly offered dealers an additional US$1,000 per vehicle as a bonus for participating.
Initially praised as a shrewd business move benefiting both dealers and consumers, the workaround quickly unraveled amid political uproar. Faced with scrutiny, the companies were forced to pull the plug within days.
Broader financial pressures mount
Beyond the immediate controversy, Detroit's automakers are grappling with broader financial headwinds. GM and Stellantis risk losing more than US$1.1 billion in Department of Energy grants awarded under the Biden administration for EV transition efforts, as the agency re-evaluates funding in light of shifting policy priorities.
The three major US automakers have also begun pushing cost pressures down the supply chain, revising contracts and imposing new terms—a move that has sparked concern among suppliers about increased financial risk and volatility.
Adding to Ford's recent challenges, a fire at a key aluminum plant in New York has disrupted production of its flagship F-150 pickup truck. The damage is expected to affect output for several months, with internal estimates forecasting potential profit losses of up to US$1 billion.
Article edited by Jerry Chen
