Exclusive-Ford reverses plan to claim EV tax credits, following GM

Ford Motor has reversed its plan to allow dealers to offer a $7,500 tax credit on EV leases, mirroring a recent decision by General Motors, following the expiration of the federal EV subsidy. While Ford aims to maintain competitive lease payments, this withdrawal underscores the industry's struggle to sustain electric vehicle demand without government incentives, a concern previously highlighted by Ford CEO Jim Farley, and could impact EV sales trajectories for manufacturers relying on lease programs.

Analysis

Ford Motor has reversed its plan to offer a $7,500 tax credit on EV leases, a move that mirrors General Motors' recent decision, following the expiration of the federal EV subsidy on September 30. While Ford states it will maintain competitive lease payments without claiming the credit, this withdrawal removes a significant incentive previously planned to bridge the subsidy gap. Both automakers had initially devised a strategy involving their in-house lending arms to claim the credit and roll it into lease terms. This action contributes to a moderately negative sentiment for Ford (-0.4).

This decision highlights a divergence in automaker strategies for sustaining EV demand post-subsidy. Unlike Hyundai and Stellantis, which are offering direct cash incentives, Ford and GM have opted against leveraging the federal credit for leases, with GM's reversal explicitly linked to political concerns. Ford CEO Jim Farley's prior warnings about significant EV sales drops without credits contrast with Hyundai's CEO's view of a more resilient EV market.

The moderately negative sentiment for Ford and GM (-0.4 each) reflects investor apprehension regarding the impact on their EV sales trajectories and profitability. Although Ford Credit continues to offer 0% financing for 72 months on EV purchases, the absence of the lease credit could dampen demand, particularly in a competitive market. Investors should monitor how these revised strategies affect market share and financial performance in the evolving EV landscape.

Key Decisions for Investors

• Monitor Ford's and GM's upcoming EV sales and market share data to assess the direct impact of the withdrawn lease credit program on consumer demand.
• Evaluate the effectiveness of Ford's alternative 0% financing for purchases and compare it against competitors like Hyundai and Stellantis who are offering direct cash incentives.
• Stay attuned to regulatory developments and potential political influences on EV policies, as government incentives continue to play a crucial role in shaping the profitability and adoption rates of electric vehicles.