Trump Plans to Eliminate EV Tax Credit: Report

The transition team for President-elect Donald Trump is discussing plans to kill the tax credit for electric vehicles as part of a larger tax overhaul, Reuters reported Thursday.

The tax credit, worth up to $7,500 for new vehicles and $4,000 for used, is 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. Authorized by the Inflation Reduction Act of 2022, President Joe Biden’s signature legislation that focuses in large part on energy and climate issues, the tax credit is restricted to vehicles that meet a variety of technical requirements, including assembly location and materials sourcing. It is also limited to vehicles that cost less than $80,000 and can be claimed only by purchasers who meet income requirements (i.e., less than $300,000 household income for married couples).

According to Reuters, the Trump transition team members discussing the elimination of the tax credit include billionaire oilman Harold Hamm and North Dakota Gov. Doug Burgum, who has close ties to the oil and gas industry.

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% on the news. But the lack of a tax credit could hurt his competitors even more, Musk reportedly said, and indeed shares in electric truck maker Rivian were down more than 14% on the day.

In Washington, 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 Republicans of undoing part of Biden’s climate-focused legacy.