Trump’s Transition Team Reportedly Eyes Elimination Of Federal EV Tax Credit

In a move that could significantly impact the U.S. electric vehicle (EV) market, President-elect Donald Trump’s transition team is planning to eliminate the federal EV tax credit program.

The current tax credit program, a key component of President Biden’s Inflation Reduction Act (IRA), offers consumers between $3,750 and $7,500 in tax incentives for purchasing eligible electric and plug-in hybrid vehicles (PHEVs). To qualify, vehicles must be built in North America and meet specific price thresholds: $55,000 for cars and $80,000 for light trucks and SUVs.

According to Reuters, Tesla expressed support for ending the subsidy. Tesla CEO Elon Musk, one of Trump’s prominent backers, has suggested that while the move might slightly impact Tesla’s sales, it would have a more devastating effect on competitors such as General Motors (GM) and other legacy automakers.

The initiative is being spearheaded by an energy policy transition team led by Continental Resources founder Harold Hamm and North Dakota Governor Doug Burgum. The team has conducted several meetings, including gatherings at Trump’s Mar-a-Lago club, where Musk has been a frequent visitor since the November 5 election.

Moreover, the move aligns with Trump’s campaign promises to boost U.S. oil production and roll back clean energy initiatives. As a result, industry response has been mixed. The Alliance for Automotive Innovation, representing most major automakers except Tesla, had previously urged Congress to retain the EV tax credits, describing them as “critical to cementing the U.S. as a global leader in the future of automotive technology and manufacturing.”

In addition, the transition team plans to use the reconciliation process to pass the legislation, the same legislative mechanism that the Biden administration used to establish the IRA

Furthermore, the current EV market could face major disruption if the credits are eliminated. Currently, only 15 EVs and six PHEVs qualify for the purchase credits, though more EVs are eligible through leasing.

Notably, the potential elimination of these credits could significantly impact affordability, particularly for lower-priced models like the upcoming Chevrolet Equinox EV, Volvo EX30, and Hyundai KONA Electric, where the credit represents a larger percentage of the purchase price.

Read More: Clean Vehicle Tax Credit: What You Need to Know for New EVs

If implemented, the elimination of the federal EV tax credits could reshape the U.S. EV market, potentially slowing adoption, especially for more affordable EVs. As many other automakers face these potential and upcoming challenges in maintaining momentum, the broader EV industry may need to continue to navigate rough waters to compete on a global scale without these crucial incentives.

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