President-elect Donald Trump’s transition team plans to kill the $7,500 consumer tax credit for electric vehicle purchases as part of broader tax reform legislation, two sources with direct knowledge of the matter said. Reuters.
Ending the tax credit could have serious consequences for an already delayed US electric vehicle transition. And yet, representatives of Tesla — by far the nation’s largest electric vehicle maker — have told a Trump transition committee they support ending the subsidy, the two sources said, speaking on condition of anonymity.
Tesla CEO Elon Musk, one of Trump’s biggest supporters and the world’s richest man, said in July that eliminating the subsidy might hurt Tesla’s sales slightly but would be “disastrous” for its competitors. in the US EVs, which include legacy automakers such as General Motors.
Tesla shares closed nearly 6% lower at $311.18, while shares of smaller EV rival Rivian closed down 14% at $10.31. Lucid, another EV maker, fell 5% to $2.08.
Eliminating the subsidy, a signature measure of Democratic President Joe Biden’s Inflation Reduction Act (IRA), is being discussed in meetings by an energy policy transition team led by billionaire oilman Harold Hamm, founder of Continental Resources and Republican Gov. of North Dakota, Doug Burgum. , the two sources said.
The group has met several times since Trump won the Nov. 5 election, including at his Florida club Mar-a-Lago, where Musk has also spent time since the election.
Representatives for Tesla and Ford did not respond to requests for comment. GM and Stellandis declined to comment.
The Alliance for Automotive Innovation urged Congress in an Oct. 15 letter to maintain tax credits for EVs, calling them “critical to strengthening the U.S. as a global leader” in future auto manufacturing.
The Trump transition team did not comment on the fate of the EV tax credit, but said in a statement that the president-elect would make good on “the promises he made on the campaign trail.”
Trump campaigned on ending Biden’s “EV mandate,” without specifying specific targeted policies. The energy-focused transition team has determined that some of Biden’s clean energy policies will be difficult to finish because they are popular and already funnel money into Republican-dominated states, the sources said.
The group sees the consumer EV credit as an easy target, believing that eliminating it would have broad consensus in a Republican-controlled Congress.
Trump could use cost savings from eliminating the credit to pay for extending trillions of dollars in tax cuts from his first term that are set to expire soon, the two sources said. Congressional Republicans plan to take up the broader tax bill as one of their first actions.
Members of the energy transition group expect the Republican Congress to implement a legislative measure known as reconciliation to avoid relying on Democratic votes. Biden used the same tactic to pass the IRA.
Eliminating tax credits for EVs is strongly supported by Hamm, a longtime Trump supporter, along with the broader oil and gas industry.
Trump promised during the campaign to boost US oil production, even though it has reached record highs, and to roll back Biden’s clean energy initiatives, which also include subsidies for wind and solar power and mass hydrogen production.
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