Impact Assessment: Dealers Evaluate Advantages and Disadvantages in Imponent New Regulations
The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, has significant implications for the retail auto market, particularly regarding electric vehicles (EVs), tax breaks, and incentives for businesses and consumers.
## Electric Vehicles (EVs)
The OBBBA marks the end of federal tax credits for EV purchases, including up to $7,500 for new EVs and $4,000 for used EVs. Consumers must purchase EVs by September 30, 2025, to qualify for these credits. This move is anticipated to cause a short-term sales spike before demand potentially collapses, as predicted by Karl Brauer, executive analyst at iSeeCars.
## Tax Breaks and Incentives for Businesses
The bill maintains the corporate tax rate at 21% and supports key business deductions, which are expected to drive investment and job growth. Additionally, the OBBBA restores 100% bonus depreciation and reinstates immediate expensing for U.S.-based R&D, benefiting businesses by reducing taxable income and encouraging investment in research and development.
## Consumer Incentives
While the bill does not directly provide consumer incentives for EV purchases, overall tax cuts and increased disposable income could boost consumer spending, potentially benefiting the auto market.
## Business and Consumer Impact Overview
The OBBBA eliminates federal fuel economy rules, which were designed to force sales of electric vehicles with no demand. This shift brings internal combustion engine (ICE) vehicles back into the spotlight, particularly hybrids, which are seen as the next practical step forward in the industry.
Dealers are rushing to sell electric vehicles before the federal tax credit expires on September 30 to avoid being stuck with unsellable inventory. The OBBBA benefits automakers with significant U.S. manufacturing, such as Toyota, Honda, and Hyundai, with construction deductions and auto-loan-interest benefits for U.S.-assembled vehicles.
Patrick Sheposh, executive vice president of Automotive Mobility Group at Ipsos, states that the OBBBA aligns with the Trump Administration's policy of reinvigorating the US industrial base, with a focus on automobile manufacturing. The Act introduces new tax breaks for businesses and consumers, which could lead to a healthier retail auto market.
In hospitality-driven markets like Las Vegas, the no tax on tips could significantly boost disposable income and consumer confidence, potentially driving more car sales. The tip deduction cap is set at $25,000.
Focused brands like Hyundai and Kia, which offer a number of electric vehicles, may face reduced demand due to the end of the federal EV tax credit. However, the OBBBA supports domestic manufacturing and business growth, which could offset these challenges.
In conclusion, the OBBBA has far-reaching effects on the retail auto market. While it may challenge the growth of the EV market due to the elimination of tax credits, it also provides numerous tax breaks and incentives for businesses and consumers, potentially leading to a healthier auto market overall.
- The ending of federal tax credits for electric vehicles (EVs) under OBBBA could lead to an increase in technology investment within the supply chain, as automakers seek to create cost-effective EV alternatives.
- As the OBBBA signifies a renewed focus on internal combustion engine (ICE) vehicles, it opens up opportunities for sports teams and leagues to reevaluate their transportation choices, potentially incorporating ICE vehicles into their supply chain.
