Trump expected to try to eliminate electric vehicle tax credit
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The Tesla Model 3. Photo: Mustafa Yalcin/Anadolu via Getty Images
The Trump administration is reportedly expected to pursue the demolition of electric vehicle tax credits that provide discounts of up to $7,500 on new EVs.
Why it matters: Those incentives have encouraged EV adoption at a time when climate advocates say it's critical to transition away from fossil fuels. But Trump has bashed the credits, which were included in the 2022 Inflation Reduction Act.
Driving the news: Trump wants to kill the credits as "part of broader tax-reform legislation," Reuters reported Thursday, citing Trump transition team sources.
The intrigue: U.S. EV market share leader Tesla — whose CEO Elon Musk has become a close confidant and supporter of Trump — has reportedly endorsed the plan.
- Analysts say Tesla is best positioned to thrive in an environment without incentives because it's already making EVs profitably and its competitors are more reliant on the credits.
- "Some may think Tesla CEO Elon Musk serving as a Trump advisor will help keep EV credits, but we think Elon wants the government out of EVs as much as possible," Morningstar analyst David Whiston wrote after the election.
- "EV tax credits getting pulled" would be "a negative for the industry" but "bullish for Tesla," Wedbush Securities analyst Dan Ives writes. "Tesla has the scale and scope that is unmatched in the EV industry and this dynamic could give Musk and Tesla a clear competitive advantage."
- Musk and a Trump transition spokesperson did not immediately respond to requests seeking comment.
What to watch: Many Republicans on Capitol Hill are skeptical of EVs, and some Republican members confirmed to Axios Pro that the EV tax credit is a top repeal target.
Yes, but: A wholesale repeal of the EV credit — which has spawned industry commitments to build factories, battery plants and mineral facilities in GOP districts — could be precarious.
- Rep. Buddy Carter, a Georgia Republican with a Hyundai EV plant in his district, acknowledged to Axios' Nick Sobczyk that the automaker probably wants the credit to remain.
- Carter was one of 18 House Republicans (most of whom will still be serving next year) who signed a letter to leadership arguing to keep the IRA's energy incentives.
What to watch for: Whether prospective buyers rush to make EV purchases before the credits go away.
- Buyers under specific income limits currently qualify for discounts of up to $7,500 on new EVs and up to $4,000 on used EVs.
- "EV interest will likely increase over the next few months," Edmunds analyst Jessica Caldwell tells Axios Generate co-author Ben Geman in an email. "President Trump has been vocal about potentially eliminating EV tax credits, so his victory could kick fence-sitters into action."
