Yahoo Finance I’m a Financial Planner: Here’s What a Kamala Harris Presidency Would Mean If You Plan To Buy a Car in 2025
The automotive industry could see some major changes after this year’s presidential election. In fact, the state of the economy — from inflation to interest rates — could shift depending on who’s elected president. The future of cars, especially electric vehicles (EVs), is also currently in question.
Although Vice President Kamala Harris hasn’t specifically offered a plan related to the car industry, experts predict that she’ll continue with many of the policies that came around during President Joe Biden’s term. There’s also speculation that a Harris presidency will affect environmental policy and current regulations, which could in turn lead to greater support for EVs.
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But what does this all mean for someone planning to buy a car in 2025 or beyond? GOBankingRates spoke with Ryan McEachron, a financial advisor, city council member and owner of ISU Armac Insurance Services to get his thoughts.
Here’s how economic and policy changes might affect your future vehicle purchase — as well as some other changes that could be coming to the automotive industry.
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There Could Be More Emphasis on Making EVs Accessible
“Election results could impact incentives or rebates for electric vehicles and tax credits for buyers,” said McEachron. “A new administration may push for broader adoption of EVs or self-driving tech.”
Under Biden, two key pieces of legislation were passed that have impacted the EV market: the Inflation Reduction Act of 2022 (IRA) and the Bipartisan Infrastructure Law (BIL).
According to the Electrification Coalition, the IRA has been an overall boon for the industry. Among other things, it has:
Extended the New Clean Vehicle Tax Credit, which is essentially a credit of up to $7,500 for eligible EVs. Income and other restrictions apply.
Enacted another federal tax credit called the Used Clean Vehicle Tax Credit. Eligible EVs qualify for a maximum of $4,000 or 30% off the used vehicle’s sales price (up to a sales price of $25,000). Income limits and vehicle restrictions apply.
Introduced the Commercial Clean Vehicle Tax Credit. With this, commercial EVs get a $7,500 tax credit. Other vehicles can receive other tax credits, depending on factors like weight and price.
Within the IRA, there have been other measures supporting both EV manufacturing and supply chains. These include:
$27 billion for the Greenhouse Gas Reduction Fund
$2 billion for the Domestic Manufacturing Conversion Grant Program
$60 million for the Diesel Emission Reduction Act program
You can learn more about these at EPA.gov or Energy.gov.
Meanwhile, the Bipartisan Infrastructure Law (BIL) has also had a significant impact on EVs. It invested the following:
$7.5 billion in EV charging
$10 billion in clean transportation
$7 billion-plus in EV battery components, materials and critical minerals
These programs are designed to support the IRA’s support for expanded tax credits for EVs, as well as domestic manufacturing and the installation of more charging stations. All of this has also been geared toward transitioning into more clean energy and safer, more affordable vehicles.
Although Biden has bowed out of running for a second term, Harris could potentially continue these same initiatives — or introduce new ones with similar goals in mind. If that were to happen, electric vehicles could become more accessible and more affordable to the average American consumer.
Right now, the average new electric vehicle costs $56,371, according to Kelley Blue Book. Gas-powered vehicles cost an average of $48,644 — about $7,727 cheaper. But if you qualify for a tax credit of up to $7,500, that cost differential quickly diminishes.
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Inflation and Interest Rates Going Forward
The Federal Reserve’s benchmark inflation rate is 2% as this is thought to bring about price stability. While inflation is slowly getting closer to that point, many potential buyers are still concerned about its impact on car affordability in the future.
Higher inflation rates typically equate to higher interest rates. According to Experian’s Q1 2024 State of the Automotive Finance Market report, the average interest rate on a new car loan is 7.18%. It’s even higher for used cars at 11.93%.
If inflation continues to fall, interest rates may also tick downward. Based on Experian’s data, however, rates have actually climbed — even as new car prices have gone slightly down.
Regardless of who is elected president, dealing with inflation and interest rates is likely to be an ongoing battle.
These Types of Changes Take Time
When it comes to major policy or government changes, things take time.
“Major policy shifts often take time, so upcoming changes in 2025 are hard to predict,” said McEachron.
If you plan to purchase a vehicle next year — whether it’s an EV or otherwise — you might not experience any significant changes. Wait another couple of years, however, and you could very well see the impact on your wallet.
Preparing To Buy a Car Next Year
Buying, owning and maintaining a car can be expensive, but there are some ways to make it a bit more feasible — regardless of who’s in office.
“The best way to prepare is focus on your needs and budget. Consider fuel efficiency and technology that meets your priorities. Buy when interest rates are low and you’re in a strong financial position,” said McEachron.
Along with this, take some time to do your research and consider the long-term costs of ownership.
“Speak with advisors about financing options and tax implications,” said McEachron. “Evaluate insurance costs for different vehicles you’re interested in. The industry and policy landscape may evolve, but your financial well-being depends on choices within your control.”
Editor’s note on election coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on GOBankingRates.com.
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This article originally appeared on GOBankingRates.com: I’m a Financial Planner: Here’s What a Kamala Harris Presidency Would Mean If You Plan To Buy a Car in 2025
