IRS Delays Impact EV Sales Amid Upcoming Tax Credit Expiration

On April 30, 2025, reports have surfaced that the Internal Revenue Service (IRS) has been slow to approve and disburse federal tax credits for electric vehicles (EVs), which is causing significant issues for car dealers and affecting EV sales just as these credits are about to vanish.

Dealers, along with industry analysts, highlighted that these delays began in mid-September. Accounts shared with CNBC reveal that multiple dealers across the country are experiencing similar problems. Two National Trade Associations confirmed these reports as well.

This situation is forcing dealers into a difficult position: either absorb the costs to keep offering credits or risk missing out on vehicle sales altogether. Jesse Roar, whose company Greenwave electric vehicles is based in New Hampshire, mentioned they are currently facing a loss of nearly $100,000 due to these delays.

Typically, consumers can access tax credits—up to $4,000 for certain credits and $7,500 for new EVs—right at the point of sale. This rebate might cover part or even all of a down payment or help lower the car’s final price. Dealers usually expect to receive these funds shortly after consumers get online approval from the IRS, with the IRS clearing payments within days. However, that’s no longer the case, causing frustration and uncertainty.

White House officials stated in an email that all legitimate EV tax credits applied for before the September 30 deadline will be honored. IRS spokesperson Robyn Capehart emphasized that the online portal is continually under IRS review, complicating the situation. The White House and the IRS didn’t elaborate on the reasons for the delays.

Uncertainty for Dealers

In light of the uncertainty, some dealers have continued issuing EV tax credits to qualified buyers, trusting that the government will eventually reimburse them. Yet, applications submitted to the IRS remain “pending,” with some approvals happening but no payments yet received. Lore, another dealer, expressed that they feel completely in the dark regarding the situation.

Timing Is Everything

The current delays come at a particularly bad time, with the impending expiration of EV tax credits. Republicans have moved to end these credits after September 30, which many see as a strategic decision. Consumers are trying to secure discounts by purchasing EVs before the credits phase out, leading to a surge in sales during August.

Cox Automotive reported a record number of new EV sales last month, creating high expectations for September. Yet, the ongoing uncertainty is causing some dealers to reconsider offering these credits, with fears of losing out on potential sales. Some dealers are already saying they won’t continue to issue credits without upfront payment.

Gary Pretzfeld, co-owner of AutoTrust USA, noted that the IRS currently owes them rebates amounting to $80,000 to $90,000 this month. He mentioned that some dealers are finding it financially challenging to navigate these changes, given that the cash-intensive nature of the auto business makes any delays particularly strained.

Scott Case, the CEO of an EV market research firm, remarked that the situation is quietly creating significant issues at a very opportune time for EV sales. Moreover, even organizations representing independent car dealers recognize the severity of the issue, with anticipation that the IRS will process payments before the program ends.

The Importance of Tax Credits

It’s important to note that while dealers are not legally required to provide advance tax credit payments, many choose to do so as an incentive for buyers. This scheme allows consumers to potentially save significantly on financing their EV, resulting in lower monthly payments.

Despite some IRS approvals coming through, dealers like Al Salas expressed frustration over the pending status of other applications. The extended timeline is creating pressure on dealers who often rely on these credits to make EV ownership accessible for more consumers.

Whether or not the IRS will resolve these issues soon remains to be seen, but the ripple effects are already being felt across the industry.