Trump’s Transition Team To Kill Biden’s EV Tax Credit

President-elect Donald Trump’s transition team is planning to eliminate the $7,500 consumer tax credit for electric vehicle (EV) purchases as part of broader tax-reform legislation, according to sources with direct knowledge of the discussions, Jarrett Renshaw, Chris Kirkham, Nora Eckert, and David Shepardson reported for Reuters.

Ending the tax credit could significantly impact the already slowing U.S. transition to EVs.

Ending the tax credit could significantly impact the already slowing U.S. transition to EVs.

Surprisingly, representatives from Tesla—America's largest EV maker—told Trump’s transition committee they support ending the subsidy, the sources said on condition of anonymity.

Tesla CEO Elon Musk, a prominent Trump supporter and the world’s richest person, remarked in July that removing the subsidy might slightly harm Tesla’s sales but would be “devastating” for its U.S. competitors, such as General Motors.

Tesla’s stock dropped nearly 6% to $311.18 following the news, while smaller rival Rivian’s shares fell 14% to $10.31. Lucid, another EV manufacturer, tumbled 5% to $2.08.

The repeal of the subsidy, a key element of Democratic President Joe Biden’s Inflation Reduction Act (IRA), is being discussed by an energy-policy transition team led by Harold Hamm, billionaire founder of Continental Resources, and North Dakota Governor Doug Burgum.

The group has convened several times since Trump’s November 5 election victory.

Nicholas Mersch, a portfolio manager at Purpose Investments and a Tesla investor, stated that Tesla is better positioned than its competitors to handle the potential sales hit.

Tesla’s “engineering and manufacturing prowess” lowers its costs, Mersch explained, adding that removing the subsidy could prevent competitors from catching up to Tesla’s cost advantages. “Getting rid of the subsidy,” Mersch said, “means that competitors can’t catch up and won’t be able to compete on a cost basis.”