Some of the potential winners and losers in the post-30D world

It’s October 1st, and the EV tax credit is over. We’re going to see sales numbers from the third quarter of the year shortly, and EV sales will predictably be high. In most cases, they’ll likely be record highs. That’s because people who were planning on buying an EV, and wanted to take advantage of the incentive moved forward with their decision to buy in the third quarter of this year.

Let’s break down some of the interesting aspects of the incentive going away, how automakers are coping with it, and who will come out ahead in the post-credit world.

For Ford and General Motors buyers, you might still be able to lease a car before the end of the year and receive the $7,500 incentive as part of your lease. The expiration of the credit can be extended with some stipulations, and the bean counters have been busy figuring out how to use that to their advantage.

I spoke with a representative from GM to explain it to me. Basically, GM Financial Services is typically the leasing arm for GM customers. GMFS applies a small down payment on every EV currently in dealership inventory on the 30th of last month. They don’t complete the sale, as that would likely start the warranty clock and also count as a new vehicle registration, but as long as the sale is completed before the end of the year, people leasing through GMFS can receive the incentive.

GM isn’t technically buying its own cars, but it’s also not not buying its own cars.

While this would only apply to vehicles in dealership inventory, I think it’s a neat way to sell through inventory (which dealers like) and still provide value to customers (which customers like).

The question on everyone’s mind is how much EV demand will be when there’s no longer a federal tax incentive. That’s a good question, and I’ve seen many analysts predict that it won’t be a significant reduction.

Ford’s CEO Jim Farley said he wouldn’t be surprised if demand is cut in half, but that seems pretty pessimistic.

The anti-EV crowd will look at sales numbers for Q3 and say, “That’s everyone who will buy an EV buying one, and that demand will tank.” I don’t think that’s the case, and here’s what I’m expecting.

First, I think that people moved forward with their decision to buy to take advantage of federal incentives. I expect to see lower numbers for a few months as a result. I think Q4’s EV sales will be lower than what they’ll be in Q4 of next year.

The thing to remember is that we’re very likely in a recession with high inflation. People aren’t spending money. Some people don’t have money. Someone who was planning on buying a car in January likely couldn’t afford to move that decision up to September.

The first quarter of next year, while seemingly early, should be a more accurate prediction of EV demand without the credit. Complicating this science experiment, which is how some people are describing the situation, is that there is the aforementioned recession. People won’t be buying EVs because they don’t have an incentive, but rather, people won’t be buying EVs (or new cars in general) because they simply can’t afford to.

That brings me on to who I think will come out on top when it’s all said and done.

Affordable cars, regardless of powertrain, are going to be more important than ever during an economic downturn. Since the EPA’s tailpipe emissions rules have been gutted, automakers don’t have a direct financial incentive to make compact, fuel-efficient vehicles. They have to choose to do so, and that will certainly dictate how some operate.

That puts Nissan — yes, THAT Nissan — in a pretty solid position. While the word is that we’re only going to get a small amount of Leafs per month because of a supplier issue, the all-electric car is not just a good deal for an EV, but a good deal for a new car.

I’m a fan, and when the base S model hits shores at under $30,000 with delivery, it’ll be one of the least expensive new cars on sale.

Nissan knew where they were going to build the Leaf, and when they were planning out the new car, they anticipated not having the federal incentive to help with the price. That bit of foresight brought us a pretty good car for a price that’s not too shabby.

I don’t think Nissan has officially announced the death of the Versa. I think it’s a bad idea to kill it at this time. But that decision is probably already made. Pricing for the new Sentra is going to be important, but it seems that the leadership in Franklin is becoming more and more aware that affordability matters to their customers and is starting to act accordingly. (Though, I do hope that the main motivator for competitive pricing hasn’t just left the company.)

Ford, on the other hand, I’m a little more concerned about. Its EV offerings are objectively getting long in the tooth, and the pricing on those EVs is still pretty high. They aren’t bad cars, but a lot of money was spent on EV investment that the company has reigned in. All the while, destination charges are skyrocketing at the Blue Oval.

There is a $30,000-ish EV pickup truck coming, so the company says, but while the announcement was a big deal, we haven’t seen a rendering or a prototype yet. Ford killed an EV Explorer for the United States. It killed hybrid versions of the Explorer and Aviator. The Maverick is a great little truck, and when it came out, the hybrid version was around $21,000 with the destination charge. Now, that truck is $29,840, which is a pretty significant price increase, but it does remain the least expensive vehicle in the company’s lineup.

What I will say about Ford is that when the current government of the United States is no longer in power, there’ll likely be a major shift back to green vehicles. The company should continue to work on its green offerings (in which it has some that are excellent, like the hybrid F-150), keep working on EVs, and be ready to flex when the time comes.

General Motors has more EVs than Ford and has pledged to work on more hybrids. By pure volume of EVs on sale, the company is in a better position to handle the transition back to EVs once Trump is no longer in power.

GM also has the Chevrolet Trax, which is a fine little crossover that starts at $25,895 with delivery. It also has the Equinox EV for around $35,000, which isn’t a bad place to sit and drive electric. The upcoming return of the Bolt likely won’t set the world on fire, but if they price it right, it will provide real competition to the Leaf and give more people a reason to switch to EV without having to incentivize it at the federal level.

CEO Mary Barra navigated rough seas to bring the company out of its bailout, so she knows how to handle a downturn. While I expect the EV pace to slow a bit, I don’t see them abandoning development. That’ll be the key. If they keep forging ahead, when the tides shift again — and they will — they won’t be behind the proverbial 8 ball.

Stellantis appears to be making a monumental shift away from EVs. First, the cheaper Charger Daytona went away. Then, they announced the death of the electric-only version of the Ram 1500. It appears that now the Charger Daytona Banshee, the uber-powered, all-electric drag strip dominator, is dead before it even saw the light of day.

I hear the Recon is still a go, but I have to admit that I’m a “believe it when I see it” kind of guy these days. I’ve seen prototypes on the road forever now, so I’d like to think that it’s still going to happen, but who knows?

In the short to medium term, it does appear that Stellantis will have a compelling EREV offering. The Ramcharger — which is now the Ram REV — should be a compelling product when it ships, and the upcoming Jeep Grand Wagoneer appears to be utilizing a similar platform.

There are some interesting hybrids coming along, including the Cherokee, so it’s not like the company has completely given up on electrification. But with the amount of emphasis that leadership has put on the Hemi’s return to the Ram 1500 — plus the elimination of the electric Banshee, which certainly guarantees a Hellcat return — it’s hard to see how that would work when the pendulum swings again.

But what about the recession? The Compass is the least expensive way to get into one of their products. The Hornet seems to be persona non grata with many buyers. While there is word that a midsize truck with a body-on-frame setup is coming, it’s still surprising that the compact trucks that Stellantis sells in Mexico haven’t been federalized for domestic service.

Tavares might not have been liked, but there were some things he wasn’t wrong about. Yes, EV sales aren’t going to be their bread and butter, but they need to keep working on their hybrid and EREV offerings, or they’ll be truly left behind when the country moves beyond the Trump government.

I’d also find a way to make a de-contented Jeep Wrangler for $25,000 to $30,000, but that’s just me.

A lot of how the recession goes will depend on how quickly an automaker can flex its production.

The Koreans are in a good spot. Thanks to Hyundai Motor Group being so completely vertically integrated, they are doing a complete product offensive of nearly all powertrain types. You want a hybrid? They got you. You want a plug-in hybrid? They got you. You want an EREV? They got you (well, they will, if my sources are accurate). You want an EV? They got you.

Because of all the industries they are in, they can absorb the hiccups of an unpredictable economy, and their facilities in the U.S. can flex as quickly or quicker than any of their competitors globally.

For EVs specifically, they have some good, affordable offerings, but I’m expecting something like an EV3 or an Ioniq 3 to come to the States to truly compete with Leaf and Equinox. While I don’t think Americans would buy an Inster, I do believe that HMG can do a cheap EV that people will want to buy, and I think the EV3 and Ioniq 3 are it.

As for recession cars, there is a solid number of inexpensive cars across Hyundai and Kia. While I’ve heard rumblings that reliability is still a concern for some, the 10-year powertrain warranty will provide peace of mind to cash-strapped buyers who need a car because our public transportation sucks.

I haven’t talked a lot about premium brands like Mercedes-Benz or BMW. Luxury brands, in some ways, are a bit more recession-resistant. That being said, some interesting new products are coming from both companies. With the iX3, particularly, the starting MSRP should be compelling regardless of the powertrain. It’s possible, sure, that these companies might develop a U.S.-specific vehicle, but it seems unlikely even in a Trump era.

Honda is inching into the EV waters, especially if you take out the GM-built Prologue and ZDX (which are both easy to cancel), but the upcoming products seem to still be on track. They have some flexibility here, but they have been making hybrids for some time, and that doesn’t seem to be stopping. The company also appears to be sitting in a reasonably strong position in a recession, with several vehicles starting in the mid-20s for pricing.

Toyota is in a similar situation, but with far more EVs. There is a showroom full of hybrids, and some models (like the Camry) are only hybrids. At one point, it might have been fair to call Toyota anti-EV — and maybe they are — but they had a chance to pull the plug on some projects before announcements this year and chose to continue forward. Combined with Subaru, both companies will have a showroom full of EVs soon, without a tax credit to help sell them.

To bring this rather long post home, I think I should summarize. I don’t think the demand for EVs is going to fall a ton without the federal incentive. There are a ton of reasons to buy an EV that don’t include the federal tax credit. Plus, in some states, there are state and local incentives to help make up for it.

Also, EVs tend to be cheaper to operate, have fewer moving parts, and in many cases are even nicer to drive than their gasoline counterpart. What will be important for the short term is figuring out how to make these EVs at a price people can actually afford.

That’ll be the case with all cars. Average transaction prices might be high on new cars right now, but that bubble is going to burst sooner than later, and the automakers that are in the best position to offer cars people can afford will come out on top.

What’s also important for every automaker to remember is that unless they actually believe that Trump is never planning on leaving office, there’ll be a switch in government sooner than later, and the gutting of the EPA will be reversed, and automakers will once again be required to build greener cars. The ones who understand that and keep that in mind moving forward will be the best ones when all of this is said and done.

Flex to what the market demands, for sure, but plan for one of the largest new car markets on the planet to look different in just a few years.