Tesla Backs Removal of EV Tax Credit

TL/DR –

Upon taking office, President-elect Trump’s administration intends to cancel the $7,500 tax credit that incentivizes the purchase of electric vehicles (EVs) in the US. The move, which aims to make EVs less competitive with gas-powered cars, could significantly hamper the growth of EV sales in the country. Despite this, Tesla’s CEO Elon Musk supports the removal of the tax credit, insisting that it would only mildly affect Tesla but would be “devastating” for its competitors.

Trump Administration May End EV Tax Credit

Reports suggest that the incoming administration of President-elect Trump will soon move to end the up-to-$7,500 tax credit for electric vehicles (EVs). This incentive has made EVs more affordable for Americans and its removal could significantly impact the EV sales trajectory in the United States. Media reports indicate this move is part of the administration’s strategy to make gas-powered cars more competitive.

Views from the Industry

The Alliance for Automotive Innovation, an auto industry trade group, has urged Congress to retain the tax credits, viewing them as crucial for the US’s leadership in auto production. However, Tesla, the leading EV seller in the US, has a different stance. Elon Musk, Tesla’s CEO, opined on X, following the initial report on the credit removal, that all government subsidies, including those for EVs and oil and gas, should end. Musk’s view is that the credit removal would hit Tesla’s competitors harder, thereby reinforcing its dominant market position.

Impact on Tesla and Other Automakers

Unlike Tesla, other automakers such as Ford and GM incur losses on their EVs, and making EV production less economical could lead them to halt production of EV models. Removing the credit could marginally affect Tesla’s profits but could significantly impact its competitors. This trajectory is concerning given the already declining EV sales due to high prices and insufficient charging infrastructure.

Future of the Tax Credits

The future of the tax credits is uncertain as they are included in President Biden’s Inflation Reduction Act (IRA). While Trump alone cannot remove them, the Republican-controlled Congress can do so through the process of reconciliation. The upcoming decisions could greatly impact the advancement of EVs in the US.

—
Read More US Economic News