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Federal Tax subsidies for battery-electric vehicles ended Tuesday. By Wednesday morning, Hyundai shoppers learned that the prices of the outstanding Ioniq 5 will actually be less expensive for the new model year, even when the now-discontinued federal subsidies are factored in. This begs the question, “Why were Americans subsidizing EVs at all?”
Hyundai has slashed the consumer cost of the Ioniq 5 dramatically heading into the 2026 model year. The average price reduction is $9,030. Some trims have had the prices cut by $9,675. The lowest amount of discounting is on the base trim, which sees its price drop by $7,474 to a starting point of $36,600. You may notice our price reporting is a bit different than the lazy, pandering media outlets that will just ignore the fact that Hyundai raised its Inland Freight and Handling fee by $125 for 2026. That’s nothing new for them. They pretend that shoppers don’t have to pay this $1,600 fee to make their headlines more punchy. We convey pricing information as accurately as possible.
Hyundai’s Ioniq 5 is this vehicle tester’s choice for best EV in the U.S. market overall. I’ve tested it for a total of about six weeks in various trims, including the racecar version Ioniq 5 N twice. Personally, I believe the Ioniq 5 Limited is the best EV for shoppers who don’t plan to use the car regularly on the track. Which is virtually 100% of owners. Those who want to pretend they will use a massively heavy five-door coupe as a race car can buy the Ioniq 5 N.
I’m not the only person who holds the Ioniq 5 in high regard. Month after Month, it is either second or third in its class in terms of deliveries. Tesla sells about ten times as many Model Ys, and Ford has a very competitive Mustang Mach-E that has similar delivery volume. Those who don’t buy a Tesla EV generally end up with either a Mach-E or an Ioniq 5, although GM now has some attractive models that have started to post similar numbers.
Hyundai’s move is both smart and obvious. The company knows that the up-front costs invested in the Ioniq 5 are spent, and that means it is well worth keeping in the U.S. market, even if the company loses some money on each one sold to do so.
There are still some leftover 2025 model year Ioniq 5 cars left on lots and in the Hyundai pipeline. These would be virtual doorstops unless Hyundai took action. There was a huge uptick in EV deliveries (nearly all on leases) over the past three months, as the new tax law that ended the federal EV subsidies gave shoppers months to go out and find the one they like best and enjoy the corporate welfare to get a “good” price. Many did exactly that, and EV delivery rates will be the highest in Q3 that we may see for years. But what about the unsold 2025s? Well, Hyundai is putting $11K cash on the dash and giving customers a free balloon if they will please take one off the lot. Roll that $11K into the vast array of state subsidies and other discounts for special groups (veterans, teachers, loyal customers, first-time customers, people with a pulse), and the lease payments can be in the low single hundreds of dollars. About as close to free as you will ever see again. Check out our example we pulled off a local dealer’s inventory page today.
We’ve seen this behavior in the past when the old EV subsidies, which had vehicle limits by manufacturer, ran out. GM discounted the Bolt by five figures, making that subsidy-free time window the period when the actual cost for a Bolt was the lowest ever. Tesla adjusted its prices to meet market levels, allowing the vehicles to continue selling. We knew then that EV subsidies were really just “free money” for the less than one out of ten new vehicle shoppers who wanted a battery electric vehicle.
One big plus of cash on the dash and simply lower sticker prices is that there aren’t any hassles with social engineering. Under the Biden democrat EV subsidies, if you earned too much and hit the income caps, you could not purchase the vehicle and enjoy the “free” money. Biden created these hassles in part because writers like me were pointing out (accurately) that most of the folks buying EVs and getting the tax breaks were filthy, stinking rich. To leave the social engineering behind, but still move cars, a handy lease loophole was added. Without that rich buyer lease loophole, EV market share would have stalled out at about 3%.
Hyundai will not be the last automaker to slash its prices for low-volume EVs. Q4 is going to be a bloodbath for EV deliveries, and in 2026, we predict 95% of American shoppers won’t buy an EV. To attract the 5% who will, automakers will have to price the vehicles similarly to equivalent hybrids, which means they need to cut about $10,000 off EV prices to move the cars off lots. EV trucks in America didn’t sell, even with the rich buyer lease loophole and huge cash-off discounts. I honestly can’t see any way that the EV trucks already on the market will ever sell in decent numbers. Automakers would have to cut about $30K off those to make them sell. Maybe they will? Ram opted to outright cancel its EV truck.
What do you think of Hyundai’s move? Will other automakers follow suit now, or will they wait until they see EV market share drop like a rock in Q4? Tell us your thoughts in the comments below.
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John Goreham is the Vice President of the New England Motor Press Association and an expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. He is a member of the Society of Automotive Engineers (SAE int). In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can connect with John on LinkedIn and follow his work on his personal X channel or on our X channel. Please note that stories carrying John’s by-line are never AI-generated, but he does employ grammar and punctuation software when proofreading and he also uses image generation tools.
Top of page image by John Goreham
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Source: torquenews.com
