Shifting EV Policy Risks and Manufacturer Strategies: GM's Tax Credit Gambit and the Fragile Future of U.S. Incentives

A line graph illustrating the decline in U.S. EV market share from 10–12% in 2024 to projected 5% by 2026, overlaid with icons of electric vehicles and policy documents.

The expiration of the U.S. $7,500 federal EV tax credit on September 30, 2025, has triggered a scramble among automakers to preserve demand in a rapidly shifting landscape. General Motors (GM) has emerged as a case study in this transition, leveraging its financial arm to secure tax credits for 30,000 EVs before the deadline, while simultaneously slowing production at key plants like Spring Hill, Tennessee, according to a USA Today report. This dual strategy-extending subsidies through creative accounting while scaling back manufacturing-highlights the fragility of the U.S. EV incentive framework and raises critical questions for investors about the sustainability of industry growth.

GM's Tax Credit Workaround: A Short-Term Fix with Long-Term Risks

GM's decision to use GM Financial to claim tax credits via lease programs has allowed it to maintain a veneer of affordability for EV buyers even after the credit's expiration, a tactic detailed in the USA Today report. By front-loading down payments on vehicles before October 1, 2025, the automaker effectively locks in the $7,500 credit, which is then passed to lessees through discounted pricing. This approach mirrors Ford's strategy, where CEO Jim Farley has framed such measures as essential for stabilizing EV ownership during the transition period. However, this tactic is inherently temporary. As of Q3 2025, GM reported record EV sales of 66,500 units, but these figures are likely inflated by the last-minute rush to qualify for tax credits, as noted in a Stanford policy brief. Once the subsidy disappears, demand is expected to contract sharply, particularly as GM halts production of models like the Cadillac Lyriq and reduces shifts for the Chevy Bolt EV.

Industry-Wide Strategies: Innovation or Desperation?

GM is not alone in its scramble. Automakers like Tesla have slashed prices on the Model 3 and Model Y by $5,000 by removing premium features, outlined in a GreenCars article, while Hyundai offers $11,000 cash-back incentives on the 2025 Ioniq 5 according to a Forbes article. Ford's "Universal EV Program" aims to produce lower-cost models, including a $30,000 EV pickup, as also reported by GreenCars. These tactics reflect a broader industry pivot from policy-driven growth to price competitiveness. Yet, the results are uneven. While Audi, Volkswagen, and Cadillac reported strong Q3 2025 EV sales growth, brands like Acura and Nissan saw declines of up to 61%, a divergence highlighted by GreenCars. This divergence underscores the challenge of sustaining demand without subsidies, particularly as consumers revert to internal combustion engines or hybrids in response to higher EV prices-an outcome flagged in an Atlas EV Hub analysis.

Policy Risks: Loopholes, Friendshoring, and Political Pushback

The U.S. EV incentive framework is riddled with contradictions. The Inflation Reduction Act (IRA) mandates that EVs be assembled in North America and use components from allied countries, aiming to reduce reliance on China, a point emphasized in the Stanford policy brief. However, the commercial EV tax credit allows retail leases without these restrictions, creating a loophole that automakers like GM and Ford are exploiting-an issue that has drawn criticism from Republican lawmakers, who argue that such practices violate the spirit of the tax credit and were covered in the USA Today reporting. Meanwhile, the Trump administration's emphasis on self-sufficiency in energy and manufacturing has further complicated the policy landscape, with Transportation Secretary Sean Duffy warning against long-term reliance on subsidies, another development reported by USA Today.

For investors, these policy shifts pose dual risks. First, the phaseout of tax credits could stifle EV adoption, with Ford projecting a drop in market share from 10–12% to 5%, as described in the USA Today coverage. Second, the IRA's friendshoring requirements may delay cost reductions in battery production, as automakers face higher costs for sourcing materials from allied nations; the Stanford brief outlines how these constraints could slow the pace of cost declines. Atlas's analysis warns that such policies could cede ground to China and jeopardize $50 billion in U.S. EV investments.

Long-Term Implications for Investors

The U.S. EV market is at a crossroads. While declining battery costs and supportive state-level policies may enable EVs to capture 13–29% of new vehicle sales by 2050, as observed in the Forbes piece, the near-term outlook is clouded by policy uncertainty. Automakers that fail to innovate beyond tax credit-dependent strategies-such as Stellantis, which canceled the Ram REV 1500-risk being left behind, a development noted in GreenCars. Conversely, companies like Tesla and Ford, which are prioritizing affordability and cost efficiency, may emerge stronger.

For investors, the key question is whether the industry can transition from subsidy-driven growth to sustainable demand. The answer lies in automakers' ability to reduce costs through vertical integration, battery recycling, and economies of scale. Until then, the U.S. EV incentive framework remains a high-stakes gamble, with GM's last-minute tax credit maneuvers serving as a cautionary tale of policy fragility.

Data query for generating a chart: Line graph comparing U.S. EV market share (2023–2026) against federal tax credit availability, with annotations on automaker strategies (e.g., GM's lease loophole, Tesla's price cuts).