President-elect Donald Trump’s transition team is planning to eliminate the $7,500 federal tax credit for electric vehicle (EV) purchases, a move that could hinder EV adoption across the United States. According to sources cited by Reuters, Trump’s energy transition team, led by billionaire oilman Harold Hamm and North Dakota Governor Doug Burgum, views this tax credit repeal as a priority for broader tax reforms. The credit, part of President Joe Biden’s Inflation Reduction Act, has supported over 300,000 EV buyers this year alone.
Despite the potential impact on EV sales, Tesla has expressed support for ending the subsidy. Tesla CEO Elon Musk stated that while removing the tax credit could slightly impact Tesla’s sales, it would likely affect other EV makers — such as Rivian, Lucid, and legacy automakers like General Motors — more significantly. Tesla’s relative independence from subsidies, owing to its established market position, could grant it a competitive advantage in a subsidy-free environment.
The Alliance for Automotive Innovation, which represents most automakers except Tesla, opposes the repeal. The group argued in a recent letter to Congress that the EV tax credits are vital for positioning the US as a leader in clean automotive technology. Environmental advocates, such as the Sierra Club, warn that the repeal would set back US climate goals and reduce consumer choice for environmentally-friendly vehicles.
Shares in EV makers, including Tesla, have fallen on the back of the reports.
