President-elect may end EV tax credit; Musk signals support

Donald Trump’s transition team, led by oil billionaire Harold Hamm, is looking to eliminate the $7,500 federal tax credit for EV purchases, according to reports.

Such a move could further slow down the EV adoption rate in the US, which was already on a downward trajectory due to EV hesitancy over charging infrastructure and high prices of battery-powered vehicles.

If enacted, the move can significantly impact EV makers, including Tesla, GM, and Ford, and undermine clean energy policies established under President Joe Biden.

However, Tesla CEO Elon Musk supports eliminating the subsidy. It is the leading EV seller in the country, accounting for nearly 50% of US electric car sales in the third quarter, according to data from Cox Automotive.

Though Tesla benefits from the tax credits, CEO Elon Musk told investors in July that the removal of credit would negatively impact its competitors more than it would hurt Tesla.

Musk believes the company will still be able to compete successfully without subsidies. However, rivals like GM, Ford, and industry groups argue that their removal could hinder the growth of the US EV market and give China an advantage.

Beijing is known for heavily subsidizing its EVs and has received global criticism. Chinese EV maker BYD surpassed Tesla sales in China, the world’s largest auto market.

Ford and GM still face challenges in EV profitability; ending the credit can weaken their market position, leaving Tesla with less competition.

Ending the tax credit requires the Congress’s approval, which will be easy to get next year with Republicans leading the House and Senate. They could pass the tax reform using the reconciliation process to bypass Democratic votes.

Auto experts suggest Americans considering buying EVs act quickly before potential price increases in 2025.