London, November 20, 2025
Ford’s UK chief has issued a warning against imposing taxes on electric vehicles amid a sharp decline in demand following the federal EV tax credit expiration on September 30, 2025, highlighting concerns over market contraction and affordability challenges.
The expiration of federal tax incentives has triggered immediate market shifts
The longstanding federal electric vehicle tax credit, which provided up to $7,500 for new EV purchases and $4,000 for used EVs, ended on September 30, 2025. This 17-year policy had significantly bridged the price gap between electric and gasoline vehicles. Ford CEO Jim Farley anticipates a dramatic sales decline, forecasting EV market share to drop from 10-12% to about 5%, effectively halving the electric vehicle segment in the U.S. This contraction follows a surge in third-quarter 2025 sales, as consumers rushed to maximize incentives, recording approximately 410,000 EV units sold.
Affordability remains the central barrier to EV adoption
Despite the appeal of electric cars for their performance and efficiency, Farley emphasizes that affordability is the crucial hurdle. Premium models like Ford’s F-150 Lightning, priced up to $90,000, are particularly sensitive to subsidy removal. The loss of a $7,500 tax credit equates to a direct price increase, deterring buyers and intensifying the struggle to compete on cost with combustion-engine vehicles.
Automakers adjust strategies amid uncertainty
In response, manufacturers are strategically shifting focus towards hybrids, which offer a more accessible entry point for consumers. Ford and General Motors initially launched financing schemes where their lending divisions purchased EV inventory to enable discounted leases until the end of 2025. However, these programs were withdrawn following political pressures from Republican lawmakers, creating additional headwinds in retail financing. This abrupt policy change also complicates battery plant investments and production capacity planning for automakers.
Wider industry and market repercussions
Beyond vehicle pricing, Ford cites tariffs as a $2 billion constraint affecting future investment flexibility in EV manufacturing. The expected market contraction and pricing shifts hint at a Q4 2025 “air pocket,” where consumer hesitancy may prevail. Although Ford maintains that the EV industry will continue to be vibrant, the scale of growth will be substantially smaller than projections made prior to the tax credit expiration.
Ford’s caution against new taxes on electric vehicles underscores concerns that further fiscal burdens could exacerbate weakening demand during this critical adjustment period for the sector. The industry faces a pivotal moment as it reassesses market viability in a post-subsidy environment, balancing innovation aspirations against financial realities.