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

Ford Motor has canceled its program designed to pass a $7,500 tax credit to electric vehicle lessees, following a similar decision by General Motors and the expiration of federal EV subsidies on September 30. The program would have involved Ford's lending arm claiming the credit and rolling it into lease terms; instead, Ford will maintain competitive lease payments and offer 0% financing for EV purchases. This move underscores industry uncertainty regarding EV sales momentum in the absence of direct federal incentives, despite differing views among auto executives on market resilience.

Analysis

Ford Motor (F) has rescinded its program designed to pass a $7,500 federal EV tax credit to lessees, a decision that follows a similar move by General Motors (GM) and the expiration of the federal subsidy on September 30. This initiative, which involved the automakers' lending arms claiming the credit and integrating it into lease terms, aimed to maintain competitive lease payments in the absence of direct federal support. Ford will now rely on existing incentives, including 0% financing for 72 months on EV purchases.

While Ford's specific reasons for cancellation remain undisclosed, GM's decision was reportedly influenced by concerns raised by Republican Senator Bernie Moreno. This contrasts with other automakers like Hyundai and Stellantis (STLA), which are offering direct cash incentives to bridge the subsidy gap, highlighting a divergent industry strategy in navigating the post-subsidy landscape.

The cancellation underscores significant uncertainty regarding future EV demand, a concern previously voiced by Ford CEO Jim Farley, who warned of potential sales declines. Conversely, the CEO of Hyundai Motor North America believes the EV market is more resilient. The overall moderately negative sentiment (-0.45) for the news, with specific negative sentiment for F (-0.4) and GM (-0.4), suggests investor apprehension about the impact on sales momentum and profitability for these manufacturers.

Key Decisions for Investors

• Investors should closely monitor upcoming quarterly EV sales figures from Ford and General Motors to assess the actual impact of the subsidy withdrawal and program cancellations on demand.
• Evaluate the effectiveness of Ford's alternative incentives, such as 0% financing, against direct cash incentives offered by competitors like Hyundai and Stellantis in sustaining market share and sales volumes.
• Consider the ongoing regulatory and political scrutiny surrounding EV subsidies, as evidenced by Senator Moreno's influence on GM's decision, which could introduce further volatility or policy shifts in the automotive sector.