Trump Administration Looks to Axe Electric Vehicle Incentives, Tax Credits

With Donald Trump having taken office, he’s already made moves to cut electric vehicle subsidies, revoking a 2021 executive order that sought 50% EV sales by 2030, according to a Reuters report, with plans to end a waiver for states to adopt zero emission vehicle rules by 2035, and eliminating EV tax credits.

However, as pointed out by Inside EVs, it may be difficult to carry all of this out. Any changes to the EV tax credit—or other provisions of the Inflation Reduction Act—would have to make it through Congress to be enacted, and nine states are already on track to ban new gas-powered car sales in 10 years.

The automotive industry isn’t thrilled over these ideas, either. The EV market in the U.S. has been on a steady incline, with one in 12 new cars sold last year being fully electric. While regions like Europe, Japan, and South Korea are lagging behind the States, we have yet to catch up to China—and some have argued axing EV tax credits would only make it harder to.

“China’s strategic focus on EVs has propelled it to global leadership,” said the Alliance for Automotive Innovation in a letter sent to Congress last October, reported CNN.

The industry trade group still contends that EV tax credits and other government incentives are crucial for U.S. automakers to compete with Chinese competitors.

In addition, as Inside EVs noted, the ball has already started rolling: automakers have invested into EV production and built long-term plans around it, with $33 billion spent by legacy automakers on factories exclusively for EVs. Government subsidies have helped keep those vehicles affordable for Americans.

“We might see a much slower adoption of EVs (with a regulation change),” Jeff Schuster, global head of automotive at GlobalData, told CNN. “But with all the investment, we’re not likely to see it reversed.”