President-elect Donald Trump’s transition team plans to eliminate a $7,500 consumer tax credit for electric-vehicle purchases as part of sweeping tax-reform legislation, two sources with direct knowledge of the matter told Reuters .
Ending the tax credit could have a serious impact on the already stalled US EV transition.
And yet representatives from Tesla – by far the country’s largest EV seller – have told the Trump-transition committee that they support ending the subsidies, said two sources, who spoke on condition of anonymity.
Elon MuskOne of Trump’s biggest supporters and the world’s richest man said earlier this year that ending subsidies might hurt Tesla’s sales slightly but would devastate its US EV rivals, including General Motors. Older vehicle manufacturers are included.
Tesla shares fell 5.5% to $311.77 in afternoon trading Thursday.
Eliminating subsidies, which has been a signature measure President Joe Biden’s Inflation Reduction Act (IRA), being discussed in meetings by an energy-policy transition team led by billionaire oilman Harold Hamm, founder of Continental Resources and governor of North Dakota. Doug BurgumTwo sources said.
The group has held several meetings since Trump’s November 5 election victory, including some at his Florida Mar-a-Lago club, where Tesla Chief Executive Elon Musk has also spent much time since the election.
Representatives for Tesla, GM, Ford, Stellantis and the Trump transition did not immediately respond to requests for comment.
The Alliance for Automotive Innovation, a trade group representing nearly all major automakers except Tesla, also did not immediately respond.
The coalition last month urged Congress to retain the EV tax credit in a letter dated October 15, calling it “critical to cementing the US as a global leader in the future of automotive technology and manufacturing.”
Without specifying specific targeted policies, Trump repeatedly pledged to end Biden’s “EV mandate” on the campaign trail.
The energy-focused transition team has determined that it will be difficult to roll back some of the clean-energy policies in Biden’s IRA because the programs have already begun allocating funds, including in Republican-dominated states where the programs are popular. Yes, sources said.
Trump’s energy transition team sees the consumer EV credit as an easy target, believing that eliminating it would gain broad consensus in the Republican-controlled Congress as part of a larger tax-reform bill.
Two sources said Trump needs the cost savings from eliminating the credit to help pay for his trillion-dollar extension of tax cuts, which is set to expire at the start of his term.
Congressional Republicans are set to take up a sweeping tax measure as one of their first acts.
Energy transition team members hope the Republican Congress will enact a legislative measure known as reconciliation to avoid having to rely on Democratic votes.
Biden adopted the same strategy to pass the IRA bill.
Eliminating the EV tax credit has been strongly supported by longtime Trump supporter Ham, as well as much of the broader oil and gas industry.
The president-elect promised before the election to boost U.S. oil production even as it hits record highs and roll back President Biden’s costly clean energy initiative, which includes EV credits in addition to wind and solar power and Subsidies are involved for large scale production. Hydrogen.
Why could Tesla benefit?
Tesla has been the biggest beneficiary of EV tax credits like Biden’s IRA law over the past few years, having also received similar credits before.
And yet eliminating subsidies now could benefit it because it could hurt growing EV competitors more than Tesla.
Musk himself alluded to this in a July earnings call when asked about the possibility of losing battery-production tax credits as well as subsidies under the Trump administration.
Tesla’s market share was less than half of all electric vehicles sold in the third quarter of this year, according to data from Cox Automotive.
Other automakers with significant US EV sales, such as GM, Ford and Hyundai, individually, are far behind.
But Tesla’s US EV rivals have collectively steadily eroded its market share in recent years, falling to more than 80% in the first quarter of 2020.
