Trump prepares to cut the EV tax credit programme

With a new President at the helm, the US is heading for interesting times. President-Elect has set his heart on canceling as many policies set by his predecessor, and the federal $7,500 tax credit landed right in his crosshair.

According to Reuters, two people from Trump’s transition team confirmed that the EV tax credit would be cut. It was introduced by the Biden administration with the aim of helping people transition from gasoline to electric-powered cars. The value of the tax credit depended on things such as the origin of the vehicle and the origin of its main components. The maximum anyone can get at the moment is $7,500.

With the new team in the White House and the EV tax credit on the chopping block, the EV industry is facing uncertain times. There’s a risk that the growth of the entire sector might slow down or even stall completely. With the likes of billionaire oil mogul Harold Hamm supporting the cut, it’s no surprise EV supporters are worried.

What is surprising is Tesla’s and Elon Musk’s stance on the issue. Neither seems to be bothered; in fact, during the Q3 earnings call, Musk acknowledged the potential of lower sales if the tax credit was cut. His take was that other manufacturers would suffer more. That is quite an interesting point of view from someone who once championed the EV transition at any cost and who is now more interested in a political career than a clean environment.

Trump’s transition team is looking at the EV tax credit as its main target. The new administration wants to cover the costs of previous tax cuts with the money it will save that way. It is putting the money from one pocket to the other, but it works for the electorate.

What does it mean for EV buyers and manufacturers? If the EV tax credit is cut, for buyers, the answer is simple - come January, the electric cars will get more expensive. For manufacturers who invested billions into electrification, the future is quite dire. We can see a shift to hybrid propulsion already underway, with many automakers reintroducing gasoline engines and pushing EV development to the back of the line.

With 100% tariffs on Chinese electric cars and without the federal tax credit, even the cheapest EVs will be out of range for many people. The progress will slow down, but it won’t stop. The US faces falling behind the rest of the world when it comes to clean transport and energy, and it’s not something that should be celebrated.

Via