EV Sales Could Plunge 30% If Trump Repeals Tax Credit

The auto industry may face a significant downturn if President-elect Donald Trump repeals the $7,500 federal tax credit for electric vehicles (EVs), according to a report by Yahoo Finance’s Pras Subramaniam.

The potential repeal would be a blow to the EV sector, which has relied heavily on the incentives to boost adoption and compete with traditional vehicles. I Photo: General Motors Facebook

The Inflation Reduction Act (IRA), a hallmark of the Biden administration, introduced the EV tax credit alongside incentives for commercial EVs and battery production. These measures fueled a surge in EV sales, which jumped 46% in 2023 to 1.19 million, compared to 813,000 in 2022, per Cox Automotive's Kelley Blue Book.

A study titled The Effects of ‘Buy American’: Electric Vehicles and the Inflation Reduction Act by researchers Joseph Shapiro, Hunt Allcott, and Felix Tintelnot simulated the impact of removing the tax credit.

The analysis found that without the credit, EV sales in the U.S. would drop by 27%, resulting in 317,000 fewer registrations annually.

Registrations would fall from 1.184 million to 867,000. The potential repeal would be a blow to the EV sector, which has relied heavily on the incentives to boost adoption and compete with traditional vehicles.