Has Trump decided to kill Biden’s $7,500 EV tax credit?
Representatives of Elon Musk’s Tesla, US’s biggest EV maker, have reportedly told a Trump transition committee that they are in favor of ending the subsidy.
Donald Trump’s transition team plans to kill the USD 7,500 consumer tax credit for EV purchases, sources have told Reuters.
The move is part of the tax reforms agenda of the president-elect’s transition team.
Representatives of Elon Musk’s Tesla, US’s biggest EV maker, have reportedly told a Trump transition committee that they are in favor of eliminating the subsidy.
Tesla CEO Musk, a Trump ally who is set to serve in the incoming administration, said earlier this year that killing the subsidy could slightly impact Tesla sales but would be “devastating” to its EV competitors in the US.
The EV subsidy is one of the key components of President Joe Biden’s Inflation Reduction Act (IRA).
Trump may use a part of the cost savings to pay for the extension of tax cuts from his first term that will expire soon, the Reuters report says.
Though Tesla is far ahead of its individual US EV competitors, its rivals collectively have been eroding Tesla’s EV market share.
But without EV subsidies, Tesla’s rivals like GM and Ford will find it hard to make selling electric vehicles profitable.
The United Auto Workers labor union (which does not represent Tesla) is a strong supporter of Biden’s USD 7,500 incentive.
Some experts fear that Trump’s move could end up benefitting the highly subsidized Chinese EV industry.
If the tax credit is eliminated, the resultant fall in EV sales would also impact other companies in the chain, such as South Korean automakers and battery producers. Also, US jobs in battery-making facilities could be at risk.
