The news is surfacing that the Trump administration is planning to revoke the EV tax credits started by the Biden administration. Tesla, the biggest EV maker, is supporting the end of the credits, which led to people speculating about the changes in the EV market and the impact of ending the credits.
EV Tax Credits
Now, the reports suggest the newly elected President Donald Trump’s administration will end the subsidies for EV purchases to broader tax-reduction legislation. The report says the energy-policy transition team led by Harold Hamm has met Trump several times and targets the Biden green-energy policies.
The end of EV tax credits will impact millions of EV customers and slow down the EV transition in the market. Trump’s biggest supporter Elon Musk will support the decision. The Alliance of Automotive Innovation has also encouraged Congress to retain the EV subsidies in their letter.
What are EV manufacturers’ stand on Trump’s ending the EV credits?
The biggest EV manufacturer in the US is Tesla and we all know he is one of the supporters of Trump. Reportedly, Tesla representatives have supported the elimination of EV tax credits. In July, Elon Musk, CEO of Tesla, said that ending the EV credits would affect Tesla a little bit but it would create major problems for the competition, such as General Motors.
The Biden EV tax credit encouraged people to buy EV vehicles and the biggest beneficiary of the credits is Tesla, still, the company is ok with ending the credits because it will affect their rivals and Tesla is the biggest player in the EV market, so it would not be affected that much in fact it would benefit the company in the longer run.
Tesla can stand the subsidy elimination hitting their purchase but competitors won’t be able to catch up with the cost. However, the other EV makers have not commented on the recent buzz of subsidies ending.
What do Biden EV credits offer?
The EV tax credit introduced by the Biden Administration offers tax credits on the purchase of new electric or plug-in-hybrid vehicles from $4000 to $7500. The credit was offered to only vehicles made in Canada, the United States, or Mexico. The credit offered is equal to 30% of the vehicle sales price for the used vehicles.
According to the Biden EV tax credit guidelines, people can receive credits up to $7,500 for new EVs and $4,000 for used EVs. Under the EV credits rules, the government also offers additional credits for home chargers and energy storage up to $1,000. The citizens can receive credits for EVs that people buy for their use and use in the US only.
To receive the tax credits, the vehicle must meet the vehicle requirement established for new and used vehicles depending on their MSRP, battery components, final assembly location, manufacturer, and other qualifications, while they meet the income threshold decided as per the filing status.
How does the ending of EV credits impact the market?
The transition team is focussing on ending previous government clean energy policies, however, seeing their popularity it will be tough. However, EV tax credits seem to be the soft target, and with its elimination, the EV market and the US economy will be impacted in the following ways:
- Trump has promised tax cuts in his campaigns and the savings from EV credits can come in handy to pay the trillion of dollars for the tax cuts. The Republicans have made it clear their first action will be the tax cuts.
- The administration estimates this move will boost US oil production and revoke the energy policies that offer subsidies for solar and wind power plants.
- The EV market will be affected as sales volume will be impacted by the EV tax credits end. Analysts suggest Tesla will benefit more from the credit elimination than any other EV maker.
The President-Elect has campaigned about eliminating the EV policies, and from reports it seems the first step is EV tax credit elimination next year. The transition team said the decision on EV credits is still in process but ensures the President will stand on his campaign promises, so the final decision will be taken after Trump holds office.
