Decoder with Nilay Patel

Episode: The EV tax credit is dead. What now?
Date: October 16, 2025
Guest Host: Jake Castronakis
Guest: Andy Hawkins, Verge Transportation Editor

Episode Overview

This episode confronts the recent expiration of the U.S. federal EV (electric vehicle) tax credit, examining its immediate impact, the complex policy background, and the uncertain future for automakers, consumers, and the nation’s climate goals. Verge's Jake Castronakis, filling in for Nilay Patel, interviews Andy Hawkins to break down what's next for the EV industry without government incentives.

Key Discussion Points & Insights

1. What Was the EV Tax Credit and Why Did It End?

• The federal EV tax credit, last configured by the Inflation Reduction Act, provided up to $7,500 off new, domestically produced EVs ([05:31]).
• The credit aimed to push adoption of EVs, combat climate change, and help the U.S. compete with China’s burgeoning EV market.
• The second Trump administration, prioritizing fossil fuels and rolling back climate policies, terminated the credit effective September 30, 2025 ([05:00], [09:54]).
• The ending was swift: EVs hit historic sales highs in August, only for incentives to evaporate weeks later ([05:00]).

Quote:
"EV sales were fantastic last quarter... more EVs sold in the U.S. than ever before... Now as of September 30th, it's been a hard stop. There is no more EV tax credit. And now we're living in a post credit world."
— Andy Hawkins [07:31]

2. The Tax Credit’s Essential Role in Building the U.S. EV Market

• The tax credit was described as “absolutely essential” for scaling EV sales beyond early adopters ([07:57]).
• Without the incentive, cost-sensitive buyers are less likely to purchase EVs, hitting automakers hard.
• Major U.S. automakers, like GM and Ford, are rapidly re-evaluating investments, factories, and production plans.

Quote:
"The credits were essential in getting those people into dealerships... Now that they're gone, there's a widespread understanding that EV sales are going to drop dramatically."
— Andy Hawkins [07:57]

3. The Politics Behind Killing the Credit

• Despite touting support for American manufacturing, the Trump administration axed the credit, aligning more closely with oil and gas interests ([09:54]).
• The tax credit became a political scapegoat, labeled as “government overreach” despite being an opt-in incentive, not a mandate ([09:54]).

Quote:
"For an administration that claims to be very pro manufacturing, this is the most anti-manufacturing thing that you possibly can do."
— Andy Hawkins [09:54]

4. Automaker Responses and Policy Workarounds

• GM and Ford tried to exploit a leasing loophole—buying their own EVs and leasing them to pass the credit to customers ([11:56]).
• After political pushback, including from Republican senators, these attempts were abandoned.
• Leasing had previously become a popular way for consumers to benefit from credits not available for direct purchases due to less stringent origin requirements for leased vehicles ([18:36]).

Quote:
"They would essentially buy all of their EVs from their dealers... then lease those to consumers with the tax credit baked into that lease price..."
— Andy Hawkins [11:56]

5. Immediate Aftermath: State Incentives, Price Cuts, and a Looming Slowdown

• States like California considered, then dropped, the idea of state-level credits—deeming it financially impossible to replace the federal role ([20:06]).
• Automakers and dealers are offloading inventory with temporary discounts, some directly matching the old credit:
  • Audi, Kia: up to $6,000 off
  • Hyundai, Lucid: up to $7,500 off
  • Rivian: low-rate financing
    These are expected to disappear soon ([20:06]).
• EV sales are likely to drop; manufacturers and dealers brace for rough quarters ahead ([22:07]).

Quote:
“[States] quickly realized that that was just not financially possible... his quote was, 'we can't make up for federal vandalism of these tax credits.'”
— Andy Hawkins [20:06]

6. The Challenge of EV Profitability and Manufacturing Transformation

• EVs remain more costly to produce than gas vehicles, chiefly due to high battery costs ([22:36]).
• Automakers have been losing billions on EVs and must now find paths to profitability:
  • Rethinking vehicle form factors—moving away from massive, energy-intensive trucks and SUVs
  • Focusing on smaller batteries, less range, and innovative manufacturing (e.g., "unicasting," Tesla’s "unboxed" build) ([33:48])
• Tesla’s own historic struggles—surviving credit eliminations and leadership controversies—demonstrate these challenges ([25:32]).

Quote:
"This is going to require a huge kind of recalibration of the production process of the supply chain... It's a huge money loser. And what they're going to have to do is now figure out a way to make EVs that are profitable."
— Andy Hawkins [22:36]

7. The Shadow of China and Global Competition

• The EV credit’s design was strongly motivated by competition with China, mandating U.S. assembly and component sourcing ([36:48]).
• U.S. battery and car factories boomed in anticipation, especially in Republican-led states.
• Now, with government support gone, China’s dominance in affordable EVs is even harder to counter, despite ongoing U.S. tariffs ([36:48]), [39:39].

Quote:
"China has, has figured it out. They have cracked the code on cheap EVs... They don't want America to become a backwater of gas-guzzling, polluting giant trucks and SUVs while the rest of the world shifts to high tech, extremely efficient electric powered vehicles."
— Andy Hawkins [33:48]

8. Future Outlook: Uncertainty & Industry Retrenchment

• Several models are being discontinued or postponed; EV choices may shrink in the near-term ([31:08]).
• The end of regulatory pressure (fuel economy standards, California's EV sales targets) means automakers must commit to electrification on their own or revert to gas ([40:17]).
• Some optimism remains: EVs are still popular with owners due to lower operating costs and other benefits ([31:08], [42:49]).
• However, sustained growth hinges on delivering truly affordable models and achieving manufacturing breakthroughs, which may take years.

Quote:
"I think automakers will really need to step up their game and truly deliver affordable models... It's just not going to be an immediate situation. I think it's going to take some time."
— Andy Hawkins [31:08]

Notable Quotes & Moments

• "EVs are expensive to make and expensive to buy. The supply chain they rely on is intertwined with China and now subject to tariffs and an escalating trade war."
  — Jake Castronakis [02:22]

• "This is a real, like, you know, just optimistic conversation we're having here. It's really just like a cheery, you know, like fun, fun talk."
  — Andy Hawkins (wry sarcasm) [10:54]

• "Buying your own cars just to sell them again with the credit that you got is kinda brilliant... It's an absolute hack. I love it."
  — Jake Castronakis (on Ford & GM's attempted workaround) [13:54]

• "None of these companies have been able to achieve any of these goals yet and it will take a much longer process... But that said, it's possible. The reality is China has, has figured it out."
  — Andy Hawkins [33:48]

Important Segment Timestamps

• [02:22] – Introduction to topic and episode purpose
• [05:00] – What the EV tax credit was and why it was important
• [07:42] – The credit’s role in building the EV market
• [09:54] – Political motives and end of the credit
• [11:56] – Automaker's attempted workarounds and their political fallout
• [18:36] – The "leasing loophole" and consumer strategies
• [20:06] – State incentives and automaker price cuts
• [22:36] – The challenge of profitability for automakers
• [25:32] – Tesla pre-credit expiration and unique market factors
• [31:08] – Market outlook: fewer models, pullbacks, tougher sales
• [33:48] – Manufacturing innovation and the Chinese model
• [36:48] – U.S.-China competition and lost policy leverage
• [40:17] – Regulatory backslide and the future of electrification
• [42:49] – Uncertain path forward and closing thoughts

Conclusion

This episode presents a candid, sometimes bleak, assessment of the U.S. EV market at a pivotal moment. With the popular $7,500 tax credit abruptly gone, automakers face mounting losses, supply chain chaos, and global pressure—especially from China. Policy and politics, rather than consumer demand or technology, are shown as powerful determinants of industrial direction. While EVs remain compelling on their own merits, the next few years will test whether the American auto industry can—without a safety net—innovate, compete, and survive.

For more:

• Listen to the full episode at Decoder
• Contact: decoder@theverge.com