The Biden administration spent a lot of time and effort to create policies that would incentivize consumers to buy EV cars. Through the Inflation Reduction Act, an EV tax credit was put in place for new and used electric vehicles.
Consumers under certain income levels can receive up to $7,500 on a new EV purchase and up to $4,000 on used EVs. There are also credits for installing charging equipment.
According to a fact sheet on the Biden-Harris campaign website, these incentives have helped triple the sales of EVs since taking office.
But, President-elect Trump’s transition team is gearing up to eliminate the $7,500 federal tax credit for electric vehicles. During his campaign, Trump did say he would end the electric vehicle mandates and feels EVs hurt American autoworkers.
Leading this charge is oil tycoon Harold Hamm and North Dakota Governor Doug Burgum. Both are part of the energy-policy transition team. They’re meeting regularly at Mar-a-Lago, where Elon Musk has been spending considerable time since the election.
In what some might consider a shock, Tesla, the EV market leader, actually supports ending the credit.
In my view, we should end all government subsidies, including those for EVs, oil and gas
— Elon Musk (@elonmusk) November 14, 2024
Why? Musk believes it could give Tesla a competitive edge. While it might ding their sales slightly, he thinks it could be “devastating” for their American competitors.
For traditional automakers, this is serious business. GM, Ford, and others are pouring billions into their EV programs. Ford’s already struggling, expecting a $5 billion loss on EVs this year. Ford has even stopped production of the electric F-150 due to a lack of sales. Without these credits, the road to EV profitability gets even steeper.
Tesla’s dominance is clear – they owned nearly half of U.S. EV sales last quarter. But here’s the kicker: their market share has actually dropped from 80% in early 2020, as competitors slowly gained ground.
The plot thickens when you consider the global picture. Chinese EV makers, especially BYD, have been dominating their home market. Trump’s team might keep or even strengthen barriers against Chinese imports, including a 100% tariff.
Organizations like the United Auto Workers union and Alliance for Automotive Innovation have both made statements condemning the removal of the tax credit.
For auto enthusiasts, this could mean a dramatic shift in the American EV landscape. While Tesla might weather the storm, thanks to their manufacturing efficiency, smaller players and traditional automakers face a challenging road ahead.
Eliminating these credits also makes EVs more expensive for consumers which could result in less being sold.
Source: Reuters