The incoming Trump administration has pledged to end electric vehicle tax credits for automakers. And before you say Elon Musk and Tesla wouldn’t like this, Elon actually supports ending the tax credit. The EV tax credit could have a serious impact on the U.S. electric vehicle transition that has stalled for all brands except Tesla.
The electric vehicle tax credit is up to $7,500 for a leased new or U.S.-made vehicle. For used electric vehicles, the credit is up to $4,000. The move is intended to encourage a broad transition from internal combustion engines to electric powertrains by lowering the net retail price of electric vehicles for U.S. consumers. I liken it to the “cash for clunkers” program, which only really helps the rich, not the average driver.
The 2022 inflation reduction bill signed by President Joe Biden focuses on energy and climate issues, introducing tax credits limited to vehicles that meet various technical requirements, including assembly location and material procurement. It is also limited to vehicles costing less than $80,000, and only buyers with a household income of less than $300,000 for a married couple can apply.
Just a reminder, kill switches, speed limiters and RV sales cessation are also included in the bill.
According to Reuters, members of the Trump transition team discussing eliminating the tax credit include billionaire oil tycoon Harold Hamm and North Dakota Gov. Doug Burgum, who has close ties to the oil and gas industry. It’s certainly in their best interest. Elon Musk, who has no investments in the oil and gas industry, has made several public statements agreeing with the move.
Tesla CEO Elon Musk said earlier this year that eliminating tax credits could harm his electric car company, sending the company’s shares down more than 5% on the news. But the lack of tax credits could hurt his rivals even more. Shares of electric truck maker Rivian fell more than 14% this week. Most established OEMs depend on these tax credits for their EV profits.
In Washington, D.C., Republicans could use eliminating tax credits to help defray the cost of tax cuts they want to enact next year. Eliminating the credit would have additional benefits for automakers, as the mandate would remove the pressure to produce cars at a loss.
The Alliance for Automotive Innovation, a trade group representing nearly all major automakers except Tesla, issued a statement to Congress last month urging them to retain the electric vehicle tax credit, saying it is “essential to solidifying the U.S. as the future of the auto industry globally.” Leadership is critical” in technology and manufacturing. “This supports my assertion that Tesla will survive while other brands reduce their EV offerings and build profitable ones.
Trump repeatedly promised to end Biden’s “electric vehicle mandate” during the campaign, but did not clarify specific targeted policies. The energy-focused transition team has determined that some of the clean energy policies in Biden’s inflation-cutting bill will be difficult to undo as the programs have already begun distributing funds, including to Republican-dominated states where they are popular. But these funds may be terminated and divested. Hopefully this is the end of the kill switch funding in Section 24-220 of the Infrastructure Act.
The larger tax reform bill planned by the Trump administration is supposed to generate cost savings by eliminating the credit and should bring trillions of dollars in tax cuts that are set to expire early in his term. Congressional Republicans have made broader tax measures one of their first actions.
The president-elect has pledged to boost U.S. oil production despite hitting record highs and roll back President Joe Biden’s costly clean energy plan, which includes credits for wind and solar power in addition to electric vehicle credits. subsidies, and mass production of hydrogen. .
Eliminating EV tax credits and mandates could help consumers choose what’s best for them. If you’re looking to buy an electric car, there are some great options out there, and we’ve reviewed them all – you can watch them all on our review channel, Car Smarts.
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