Trump's Transition Team Has Biden's EV Tax Credit In Its Sights

And so it begins, and predictably so. According to Reuters, two sources with “direct knowledge on the matter” say that President-elect Donald Trump’s transition team plans to end the $7,500 consumer tax credit for electric vehicle purchases. If you were hoping to get assistance with a new Scout Terra, and if you thought Tesla CEO Elon Musk’s relationship with the incoming commander-in-chief might help forward the adoption of EVs, you may have to readjust your expectations. In July, Musk already said that it would have minimal effect on Tesla but would be “devastating” to its US EV competitors. No doubt Musk, already the richest person in the world, will be happy with that, and now be looking for regulation to be relaxed on the pathway to Tesla’s robotaxis making it to the streets.

Tesla

Tesla, Inc. is an American electric vehicle manufacturer largely attributed to driving the EV revolution. Through the Model S and subsequent products, Tesla has innovated and challenged industry conventions on numerous fronts, including over-the-air updates, self-driving technology, and automotive construction methods. Tesla is considered the world’s most valuable car brand as of 2023, and the Model Y the world’s best-selling car in the same year, but the brand’s greatest achievement is arguably the Supercharger network of EV charging stations.

Founded: July 1, 2003
Founder: Martin Eberhard, Marc Tarpenning
Headquarters: Austin, Texas, USA
Owned By: Publicly Traded
Current CEO: Elon Musk

Taking Down An Easy Target

According to these sources, the transition team sees the consumer EV credit as an easy target, and a popular one in the Republican-controlled Congress that, using a legislative measure known as reconciliation, should avoid relying on Democratic votes. It’s then likely the president-elect will use the savings to offset an extension of the trillions of dollars in tax cuts from his first term, which are due to expire soon.

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On October 15, in a letter to Congress, the Alliance for Automotive Innovation urged Congress to retain the EV tax credits, describing them as “critical to cementing the US as a global leader” in the future of automotive manufacturing. However, the energy-policy transition team is part-led by billionaire oil tycoon, Harold Hamm, the founder of Continental Resources, so it seems unlikely the Alliance for Automotive Innovation’s warning will be heeded.

Inflation Reduction Act Is Driving Huge Investment In America

GM recently joined the throngs of investors motivated by the Act, announcing a $491 million investment in its Indiana-based metal stamping operations.

Long-Term Impact Remains To Be Seen

On the campaign trail, Trump promised to boost US oil production, even though we are seeing record highs in production, and to roll back Biden’s clean-energy initiatives – including mass production of hydrogen. If so, it could set back hydrogen vehicles, including for the trucking industry, decades. It’s not all doom and gloom for clean energy, though. According to Reuters’ sources, the energy-focused transition team sees that some of Biden’s policies will be tough to kill because they are popular, particularly with Republican-dominated states that they funnel money to.

How much difference ending tax credits now will make is debatable. EV sales in the US have slumped as all the other parts of the puzzle have failed to fall into place. The most impactful failure of the path to all-electric vehicles is the charging network and the government’s ignoring the need to improve electrical infrastructure that monopoly energy companies don’t want to spend money on improving in the name of maintaining increasing profits. The danger, as the Alliance for Automotive Innovation points out, is that the US could lose its place as an innovator and endanger the US automotive industry as the rest of the world continues with strong adoption rates – most notably, China and Europe.