President-elect Donald Trump's transition team plans to eliminate the $7,500 consumer tax credit for electric vehicle purchases as part of sweeping tax reform legislation, two people with direct knowledge of the matter said. person told Reuters.
Ending the tax credit could have a significant impact on America's already stalled EV transition.
Still, representatives from Tesla, the nation's largest EV seller, told the Trump transition committee that they support ending the subsidies, two sources said, speaking on condition of anonymity.
Elon Musk, one of President Trump's biggest supporters and the world's richest man, said earlier this year that eliminating subsidies could hurt Tesla's sales slightly, but General He said it would be a devastating blow to U.S. EV competitors, including traditional automakers such as Motors.
Tesla shares fell 5.5% to $311.77 in Thursday afternoon trading.
Eliminating subsidies, the centerpiece of President Joe Biden's Inflation Control Act (IRA), is a major step toward eliminating subsidies for the energy industry, led by billionaire oilman Harold Hamm, founder of Continental Resources, and North Dakota Governor Doug. This is being discussed at the Policy Transition Team meeting. Two sources close to Mr. Burgum said this.
The group has met several times since Trump won the Nov. 5 election, including with Tesla CEO Elon Musk, who has spent considerable time following the election. This includes meetings at the Mar-a-Lago Club in Florida.
Representatives for Tesla, General Motors, Ford, Stellantis and the Trump transition did not respond to requests for comment.
The Alliance for Automotive Innovation, an industry group representing nearly every major automaker other than Tesla, also did not immediately respond.
Last month, the coalition urged Congress in a letter dated Oct. 15 to preserve the EV tax credit, saying the EV tax credit is “critical to solidifying America as a global leader in the future of auto technology and manufacturing.” He argued that it was important.
Trump repeatedly promised on the campaign trail to end Biden's “EV mandate,” without specifying which policies he would target.
The energy-focused transition team said it is likely that Biden's IRA's clean energy policy will be a part of Biden's IRA, given that the program has already begun distributing money, including in Republican-dominated states where it is popular. Officials said it was determined that it would be difficult to withdraw the department. .
President Trump's energy transition team sees consumer EV credits as an easy target, believing their repeal could garner broad consensus in the Republican-controlled Congress as part of a sweeping tax reform bill. .
President Trump will need to save money by extinguishing the credit to pay for an extension of trillions of dollars in tax cuts that are set to expire at the beginning of his term, two sources said.
Congressional Republicans plan to take broader tax action as one of their first actions.
Energy Transition Team members expect the Republican Congress to introduce legislation known as “reconciliation” to avoid relying on Democratic votes.
Biden used the same tactic to get the IRA bill passed.
Repealing the EV tax credit is strongly supported by Mr. Hamm, a longtime Trump supporter, and much of the broader oil and gas industry.
The president-elect promised before the election to increase production even as U.S. oil production is at an all-time high and scale back President Biden's costly clean energy efforts. In addition to EV financing, this includes subsidies for wind and solar power generation and mass production of oil. hydrogen.
Why Tesla is profitable
Tesla has long been the biggest beneficiary of EV tax credits like those in Biden's IRA bill and similar tax credits that came before it.
But ending subsidies could hurt Tesla's EV competitors more than Tesla, so it could potentially benefit Tesla.
Musk himself made a similar point during an earnings conference in July when asked about the possibility of the subsidy being lost along with the battery production tax credit under the Trump administration.
Tesla accounted for just under half of all electric vehicles sold in the third quarter of this year, according to data from Cox Automotive.
Other automakers with significant EV sales in the U.S., such as GM, Ford, and Hyundai, are individually far behind.
But Tesla's U.S. EV rivals have steadily eroded their overall market share in recent years, reaching more than 80% in the first quarter of 2020.
