President-elect Trump is reportedly considering rolling back the Biden administration's credibility for electric vehicles, a move that experts say will have mixed effects on the auto industry as a whole.
President Biden has implemented tax credits of up to $7,500 to encourage the purchase of environmentally friendly vehicles. But sources told Reuters that President Trump plans to eliminate the tax credit as part of Biden's full push for climate change.
The decision continues to be debated among oil and energy advocates, but one public policy group representing the natural gas industry says that if EV credits are eliminated, auto organizations and consumers will be left behind. He suggested that it might be a relief.
“Losing $70,000 on an EV is not a viable business model, and American automakers know that,” said Tim Stewart, president of the American Oil and Gas Association. Stewart said the repeal of the EV tax credit provides an opportunity for members of the auto industry to return to traditional production lines.
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A Tesla car sits in a dealership parking lot on June 27, 2022 in Corte Madera, California. (Justin Sullivan/Getty Images)
“If I were CEO, I would be quietly relieved that we now have a reason to go back to traditional production lines and invest in new hybrid technology,” Stewart told Fox News Digital. “The EV tax credit was the only way to get consumers to 'maybe' buy something they didn't really want, but that Biden told them they had to buy.”
“With the tax credits gone and Biden's onerous regulatory mandates lifted, the new administration is providing the exit ramp that American producers really wanted and that American consumers really wanted. ”
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But proponents of the tax credit, such as Energy Secretary Jennifer Granholm, and advocates of switching to EVs argue that eliminating the tax credit would make the U.S. industry less competitive.
“The auto industry invests billions of dollars in EV batteries and EV manufacturing in the U.S., and eliminating the tax credit will hurt the U.S. auto industry,” said Ingrid Malmgren, senior policy director at Plug in America. “This will reduce the international competitiveness of U.S. manufacturers.” , a Los Angeles-based nonprofit organization that advocates for the transition to electric vehicles.
Experts say the elimination of tax credits could have a different impact on the entire auto industry.
Elon Musk speaks at America PAC Town Hall in Lancaster, Pennsylvania on October 26, 2024. (Samuel Corum/Getty Images)
Tesla CEO Elon Musk, one of Trump's strongest allies, made clear in July that he supports eliminating trust. “Take away the subsidies,” Musk wrote to Mr. X, saying, “It only helps Tesla.”
A narrower playing field for electric vehicles could benefit financially healthy companies such as Tesla, but it could setback small businesses that rely on tax credits to make prices affordable for consumers. Analysts have suggested that it could face
“Tesla has a very significant cost advantage in EVs,” said David Whiston, an analyst at financial services firm Morningstar, according to a report by CPA Practical Advisors. “Eliminating that tax credit won't necessarily hurt them.”
Dan Ives, a senior equity research analyst at Wedbush Securities with a focus on EVs and technology, conducted a study on the market impact on Tesla if the EV credit were eliminated.
“While this is clearly negative for the EV industry at first glance and would be particularly damaging to GM, Ford, Stellantis, and Rivian…on the flip side, we believe that over time this will be a net positive for Tesla and Musk. We see this as a bullish move,” Ives said in a report on Tesla. “As these EV discussions take place within the Trump transition team, we expect Musk to have a large seat at the table.”
Electric car on charging station. (Kurt “Cyber Guy” Knutson)
“Consistent with our thinking over the past several weeks, Tesla has unparalleled scale and scope, and while losing the EV tax credit could also hurt some of its U.S. margin demand, this Tesla will be able to fend off even more competition from the U.S. Once the EV tax credit is gone, Detroit's pricing, scale and coverage will be a fine line compared to the rest of the auto industry, Ives added. .
Ives also said the credit removal could slow the transition to EVs, especially in Detroit.
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During the campaign, Mr. Trump emphasized his intention to target Mr. Biden's clean energy initiatives, including pledging to “repeat the electric vehicle mandate.”
