Trump Transition Team Aims to Eliminate $7,500 EV Tax Credit

President-elect Donald Trump’s transition team is planning to eliminate the $7,500 consumer tax credit for electric vehicle (EV) purchases, according to sources cited by Reuters. This move is part of broader tax-reform legislation and aligns with Trump’s previous criticisms of government incentives for electric vehicles.

The EV tax credit, which was revised and expanded under President Joe Biden’s Inflation Reduction Act (IRA), has been a key factor in promoting the adoption of electric vehicles. However, Trump’s energy-policy team, led by Continental Resources founder Harold Hamm and North Dakota Governor Doug Burgum, views the credit as an easy target for elimination to help fund the extension of Trump’s tax cuts.

Interestingly, representatives of Tesla, the largest EV maker in the world and a company owned by one of Trump’s significant supporters, Elon Musk, have reportedly told a Trump-transition committee that they support ending the subsidy. Musk has suggested that while ending the credit might slightly hurt Tesla’s sales, it would have a more devastating impact on Tesla’s competitors, such as General Motors and Rivian.

The potential elimination of the EV tax credit has already had an impact on the market, with Tesla shares dropping by more than 5% and Rivian’s shares dipping by nearly 12% following the news. Analysts believe that Tesla’s scale and market position could give it a competitive advantage if the credits are scrapped, while other EV manufacturers might face significant challenges.

The move is part of Trump’s broader plan to roll back clean-energy initiatives introduced by the Biden administration, including subsidies for wind and solar power and hydrogen production. Trump has promised to boost U.S. oil production and has the support of the oil-and-gas industry in his efforts to eliminate the EV tax credit).