Trump transition team plans to end EV tax credit

15/11/2024 6:06

        President-elect Donald Trump's
        transition team is planning to kill the $7,500 consumer tax
        credit for electric-vehicle purchases as part of broader
        tax-reform legislation, two sources with direct knowledge of the
        matter told Reuters.
        
        Ending the tax credit could have grave implications for an
        already stalling U.S. EV transition. And yet representatives of
        Tesla - by far the nation's largest EV seller - have told a
        Trump-transition committee they support ending the subsidy, said
        the two sources, who spoke on condition of anonymity.
        
        Elon Musk, one of Trump's biggest backers and the world's
        richest person, said earlier this year that killing the subsidy
        might slightly hurt Tesla sales but would devastate its U.S. EV
        competitors, which include legacy automakers such as General
        Motors.
        
        Shares of Tesla fell 4% to $316.61 on Thursday.
        
        Repealing the subsidy, which has been a signature measure of
        President Joe Biden's Inflation Reduction Act (IRA), is being
        discussed in meetings by an energy-policy transition team led by
        billionaire oilman Harold Hamm, founder of Continental
        Resources, and North Dakota Governor Doug Burgum, the two
        sources said.
        
        The group has had several meetings since Trump's Nov. 5
        election victory, including some at his Florida Mar-a-Lago club,
        where Tesla chief executive Elon Musk has also spent
        considerable time since the election.
        Representatives of 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 besides Tesla, also did
        not immediately respond. The alliance last month in an Oct. 15
        letter urged Congress to retain the EV tax credits, calling them
        "critical to cementing the U.S. as a global leader in the future
        of automotive technology and manufacturing."
        
        Trump repeatedly pledged to end Biden's "EV mandate" on the
        campaign trail, without spelling out specific targeted policies.
        The energy-focused transition team has determined that some of
        the clean-energy policies in Biden's IRA will be tough to roll
        back given that the programs have already started allocating
        money, including to Republican-dominated states where the
        programs are popular, the sources said.
        
        Trump's energy transition team views the consumer EV credit
        as an easy target, believing that eliminating it would get broad
        consensus in a Republican-controlled Congress as part of a
        larger tax-reform bill.
        Trump needs the cost savings from killing the credit to help pay
        for the extension of his trillions of dollars in tax cuts that
        are set to expire early in his term, the two sources said.
        Congressional Republicans are set to take up the broader tax
        measure as one of their first actions.
        
        Members of the energy transition team expect the Republican
        Congress will deploy a legislative measure known as
        reconciliation to avoid relying on Democratic votes. Biden used
        the same tactic to get the IRA bill passed.
        Killing EV tax credits is strongly supported by Hamm, a
        long-time Trump supporter, along with most of the broader
        oil-and-gas industry.
        
        The president-elect promised before the election to boost
        U.S. oil production even as it has hit record highs and to roll
        back President Biden’s costly clean energy initiatives, which in
        addition to the EV credit include subsidies for wind and solar
        power and the mass production of hydrogen.