Reuters recently reported that the transition team of recently elected U.S. President Donald Trump is planning to cancel the $7,500 consumer tax credit for electric vehicle purchases provided under the IRA bill of the Biden era. The cancellation of this tax credit is part of the broader tax reform that the Trump administration is undertaking.
According to Reuters, citing two anonymous sources, representatives from Tesla, the largest U.S. automaker, supported the Trump transition committee's decision to end the aforementioned subsidy. Musk said in July that canceling the subsidy might slightly damage Tesla's sales, but it would deal a "devastating blow" to its U.S. electric vehicle competitors, including traditional automakers like General Motors.
Reuters also stated that an energy policy transition team led by Harold Hamm, founder of Continental Resources, and Doug Burgum, the Republican Governor of North Dakota, is discussing the repeal of the tax credit from the Inflation Reduction Act (IRA) in meetings.
However, Tesla, Ford, General Motors, and Stellantis all declined to comment on the news from Reuters.
Currently, the U.S. Department of Energy's Office of Energy Efficiency and Renewable Energy (EERE) has announced 49 electric vehicle models eligible for IRA tax credits in 2024, including 10 Tesla models such as Model 3, Model Y, and Model X. Other electric vehicle models eligible for tax credits include Volkswagen ID.4, Rivian R1, Chevrolet, Ford, Cadillac, Chrysler, and more.
Tesla CEO Elon Musk, one of the biggest supporters of Trump's presidential campaign, was recently appointed by Trump as the head (minister) of the Department of Government Efficiency (DOGE). Trump's appointment letter stated that Musk will collaborate with Vivek Ramaswamy to lead the DOGE, with the goal of curbing government spending. The will work together to dismantle Government Bureaucracy, slash excess regulations, cut wasteful expenditures, and restructure Federal Agencies - Essential to the 'Save America' Movement. After receiving the appointment, Musk posted on social media that he would post all DOGE actions online for maximum transparency and establish a leaderboard for most insanely dumb.
The policies of the Trump administration are expected to impact the global electric vehicle market, including the U.S. Due to the lack of a mature and complete industry chain like China's, U.S. electric vehicle product prices are high. This year, the demand for the U.S. electric vehicle market has already cooled down, and General Motors and Ford have slowed down the pace of their electrification transformation. If Trump repeals the relevant support and inclination policies, resources and investment in the electric vehicle field by U.S. automakers will further decrease, leading to a stagnation in the U.S. electric vehicle market. Therefore, some U.S. industry insiders are worried that canceling the tax credit could severely affect the U.S. electric vehicle transition, which is already lagging behind China and Europe, and believe that Tesla's support for the Trump administration's plan to cancel the $7,500 federal tax credit for electric vehicles contradicts Tesla's original intention to accelerate the transition to electric transportation.
Tesla is currently striving to achieve a record increase in sales in the fourth quarter to avoid a decline in annual deliveries. However, the Trump administration must obtain congressional approval to cancel electric vehicle incentives, and the final outcome remains to be seen.
