Trump incoming administration has promised to end the EV tax credit for automakers. Before you say Elon Musk and Tesla won’t like this, Elon is actually in support of the ending the tax credit. The EV tax credit could have grave implications for an already stalling U.S. EV transition for all brands except Tesla.

The EV tax credit is worth up to $7,500 for leased new vehicles or vehicles built in the US. For used electric cars there is up to a $4,000 credit. This was meant to encourage a broad transition from internal combustion engines to electric drivetrains by lowering the net retail price of electric vehicles for American consumers. I liken this to the Cash For Clunkers program which both only really helped the wealthy and not the average driver.

The Inflation Reduction Act of 2022, signed by President Joe Biden focused in large part on energy and climate issues, the introduced tax credit was restricted to vehicles that meet a variety of technical requirements, including assembly location and materials sourcing. It's also limited to vehicles that cost less than $80,000 and can be claimed only by purchasers who make less than $300,000 household income for married couples.

Just a reminder that the kill switch, speed limiters, and motorhome stop-sales are all in this bill too.

According to Reuters, the Trump transition team members discussing the elimination of the tax credit include billionaire oilman Harold Hamm and North Dakota Governor Doug Burgum, who has close ties to the oil and gas industry. This is of course, in their best interests. Elon Musk who has no investment in the oil and gas industry, has made public statements agreeing with the move multiple times.

Tesla CEO Elon Musk said earlier this year that eliminating the tax credit could hurt his electric car company, whose shares fell more than 5% after the news broke. But the lack of a tax credit could hurt his competitors even more. Shares in the electric truck maker Rivian were down more than 14% this week. Most established OEMs' EV profits hinge on these tax credits.

In D.C., Republicans could use the elimination of the tax credit to help cover the cost of the tax cuts they want to implement next year. And killing the credit would come with the added bonus for car makers as the mandate will remove the pressure of making cars at a loss.

The Alliance for Automotive Innovation, a trade group representing nearly all major automakers besides Tesla, made a statement last month to Congress urging them to retain the EV tax credits, calling them "critical to cementing the U.S. as a global leader in the future of automotive technology and manufacturing." Which back up my statement that Tesla will survive while other brands reduce their EV offerings and build what is profitable.

Trump has repeatedly pledged to end Biden's "EV mandate" on the campaign trail, without spelling out specific targeted policies. The energy-focused transition team has determined that some of the clean-energy policies in Biden's Inflation Reduction Act, will be tough to roll back given that the programs have already started allocating money, including to Republican-dominated states where the programs are popular. But these funds can end and can be stripped out. Let hope this is the end of the funding for the kill-switch in Section 24-220 from the Infrastructure Bill.

The larger tax-reform bill planned by the Trump administration should be a cost savings by killing the credit, and should result in trillions of dollars in tax cuts that are set to expire early in his term. Congressional Republicans are set to take up the broader tax measure as one of their first actions.

The president-elect has promised to boost U.S. oil production even as it has hit record highs and to roll back President Biden’s costly clean energy initiatives, which in addition to the EV credit include subsidies for wind and solar power, and the mass production of hydrogen.

Killing EV tax credits and the mandate helps consumers choose what best for them. If you want to buy an EV there are some great choices, we have reviewed them all - you can watch them on our review channel, Car Smarts.

Video Link: https://youtu.be/CIKe55o_vOg

You can support me by buying me a cup of coffee. Thanks for subscribing and your support! https://www.buymeacoffee.com/laurenfix

Looking for more automotive news? https://youtube.com/@car-smarts

Additional articles on our website https://www.CarCoachReports.com

"LAUREN FIX'S GUIDE TO LOVING YOUR CAR” Book - https://amzn.to/3ifDi3j

Total Car Score Podcast ► Hosts: Lauren Fix, Karl Brauer and Javier Mota. https://www.revolverpodcasts.com/shows/total-car-score/

_______________
Lauren Fix, The Car Coach is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.