President-elect Donald Trump’s transition team is planning to eliminate the $7,500 federal tax credit for electric vehicle (EV) purchases, a move that could hinder the adoption of electric vehicles in the United States. Trump’s energy transition team, led by billionaire oilman Harold Hamm and North Dakota Governor Doug Burgum, sees repealing the tax credit as a priority for broader tax reforms, according to sources cited by Reuters. The credit, part of President Joe Biden’s Inflation Reduction Act, has supported more than 300,000 electric vehicle buyers this year alone.
Despite the potential impact on EV sales, Tesla has expressed support for ending the subsidy. Tesla CEO Elon Musk said that while removing the tax credit might have a slight impact on Tesla’s sales, it would likely affect other electric vehicle makers — such as Rivian, Lucid and legacy automakers like General Motors — more significantly. Tesla’s relative independence from subsidies, due to its established market position, could give it a competitive advantage in a subsidy-free environment.
The Alliance for Automotive Innovation, which represents most automakers except Tesla, opposes the repeal. The group argued in a recent letter to Congress that electric vehicle tax credits are vital to positioning the United States as a leader in clean automotive technology. Environmental advocates, such as the Sierra Club, warn that repeal would hinder U.S. climate goals and reduce consumer choice for eco-friendly vehicles.
Shares of electric vehicle makers, including Tesla, fell in the wake of these reports.