Trump White House plans to ‘kill’ EV tax credit: report

President-elect Donald Trump’s White House reportedly plans to kill the electric vehicle tax credit, which can take up to $7,500 off the price of an EV at the federal level.

Trump, who was critical of government involvement in pushing consumers to EVs during his campaign, could make the move as part of broader tax reform legislation.

Reuters is reporting that two sources with direct knowledge of the matter told them that the tax credit will disappear under the Trump administration.

It would be a huge blow to EV makers who rely on the credits to bring some consumers into a level of affordability.

The tax credit was revised by the Biden administration as it removed the previous cap that manufacturers had. OEMs had 200,000 EV sales to work with. Once they reached that number, they were no longer able to market the credit to their vehicles as it would not apply.

The Biden Administration changed the rules to help EVs become more accessible to the general public. EV market share has grown substantially, with Tesla leading the way.

However, a new White House administration with less leniency plans to eliminate the tax credit altogether, the report suggests.

The sources also said that Tesla representatives are in support of ending the subsidy, but this seems hard to believe considering the company said it would use credits to launch their next-generation vehicle platform, set to release in the first half of next year, to get the price point under $30,000.

Musk said during the Q3 earnings call:

“Yeah. It will be like with incentive. So, $30K, which is kind of a key threshold.”

However, Reuters’ report indicates Tesla would support removing the credits:

“Ending the tax credit could have grave implications for an already stalling U.S. EV transition. And yet representatives of Tesla – by far the nation’s largest EV seller – have told a Trump-transition committee they support ending the subsidy, said the two sources, who spoke on condition of anonymity.”

Tesla would be fine if the credit disappeared, but other companies like General Motors, Ford, and Rivian would likely feel its impact severely.

Dan Ives of Wedbush even said in notes to investors that Tesla would be fine without the tax credit being established:

“EV tax credits getting pulled a negative for the industry….bullish for Tesla. We believe a Trump presidency will be an overall negative for the EV industry as very likely the EV rebates/tax incentives get pulled, however for Tesla we see this as a potential positive with some caveats. Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment starting in 2025, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players (BYD, Nio, etc.) from flooding the US market over the coming years.”

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Author: Joey Klender