Exclusive-GM backtracks on plan to claim last-minute EV tax credits

General Motors' EV Tax Credit Decision

By Mike Colias and David Shepardson

Background on the Tax Credit

(Reuters) -General Motors is scrapping a program aimed at allowing its dealers to continue offering for several months a $7,500 tax credit on electric-vehicle leases following the September 30 expiration of the federal subsidy, the company said on Wednesday.

Reactions from Industry Leaders

Toward the end of last month, GM devised a plan to have its in-house lending arm initiate the purchase of EVs in its dealers’ inventory. The company planned to apply for the federal $7,500 credit on those cars and then roll that money into EV lease terms for customers through the end of the year.

Future of EV Sales Post-Credit

GM opted to kill the program after concerns were raised about it by Republican Senator Bernie Moreno of Ohio, a former car dealer who is active in auto policy, a person briefed on the matter told Reuters.

“After further consideration, we have decided not to claim the tax credit,” the company said in a statement to Reuters on Wednesday, declining to elaborate on the reason for its decision.

The idea behind the program was to ease the impact of the expiration of the tax credit on dealers, who worried they would be stuck with EVs that would be tough to sell. GM had planned to apply for the credit on tens of thousands of EVs in dealer stocks, according to people familiar with the plan.

Ford rolled out a similar program ahead of the tax-credit expiration. It is unclear if Ford is continuing its program. A spokesperson declined to comment.

GM had planned to claim the credit on roughly 20,000 EVs that were on dealership lots or being shipped to stores, people familiar with the matter said. Its finance arm, GM Financial, began making down payments on those vehicles before the deadline to qualify for the subsidy on each of those cars, the sources said.

In its statement on Wednesday, the company said it would "fund the incentive lease terms" through the end of October.

GM scrambled to put together the program just a few days before the September 30 tax-credit expiration, and outlined the details on a call with dealers on September 29, three sources said. GM officials had caught wind of a similar program that Ford was putting in place for its dealers, the sources said.

Auto executives, dealers and analysts have said they expect EV sales to plummet in the wake of the tax credit’s disappearance. A consumer rush to take advantage of the subsidy helped drive record electric-car sales in September.

(Editing by Mike Colias, Mark Porter and Chris Reese)