Trump Team Seeks to Eliminate Biden’s EV Tax Credit: Report
TL/DR –
Donald Trump’s transition team is reportedly planning to end a $7,500 tax credit for electric vehicle purchases. This move, which Tesla reportedly supports, could have significant implications for the US electric vehicle industry. The subsidy is part of President Joe Biden’s Inflation Reduction Act, and ending it would help fund trillions of dollars in tax cuts proposed by Trump.
Trump’s Transition Team Targets Electric Vehicle Tax Credit
According to unnamed sources, Donald Trump’s transition team is considering eliminating the $7,500 consumer tax credit for electric vehicle (EV) purchases as part of extensive tax-reform legislation. This move could significantly impact the already struggling EV transition in the US.
Surprisingly, representatives from Tesla – the nation’s leading EV seller – endorse the end of the subsidy. Tesla CEO Elon Musk earlier expressed that while the termination might slightly affect Tesla sales, it would massively impact its US EV competitors, such as General Motors.
On Thursday, Tesla shares fell 5.5 percent to $311.77 in the afternoon trading session. The potential removal of the subsidy, a key component of President Joe Biden’s Inflation Reduction Act (IRA), is being discussed by an energy-policy transition team led by oil tycoon Harold Hamm and North Dakota Governor Doug Burgum.
The team, which has had numerous meetings post-Trump’s November 5 election win, sees the consumer EV credit as an easy target. They believe its removal would be supported in a Republican-controlled Congress as part of a larger tax-reform bill.
Trump’s promise to increase US oil production and rollback Biden’s costly clean energy initiatives is strongly endorsed by Hamm and the broader oil-and-gas industry.
Tesla’s Advantage?
Despite being a significant beneficiary of EV tax credits, Tesla could gain from the subsidy’s termination. This could potentially harm rising EV competitors more than Tesla itself. Musk confirmed this in a July earnings call.
Based on Cox Automotive data, Tesla held just under half of all electric vehicles sold in the third quarter of this year. However, its US EV rivals have in recent years steadily eroded its market share, which was more than 80 percent in the first quarter of 2020.
Any official statements from Tesla, GM, Ford, Stellantis, and the Trump transition team are awaited. The Alliance for Automotive Innovation, which represents nearly all major automakers except Tesla, hasn’t responded either.
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