Trump Plans to Kill $7,500 EV Tax Credit, Tesla Reportedly Supports Move

A bombshell report reveals President-elect Trump’s transition team is planning to eliminate the $7,500 federal tax credit for electric vehicle purchases, with unexpected support from EV market leader Tesla, according to Reuters.

Critical Policy Change Looms

The potential elimination of this key EV incentive, a cornerstone of Biden’s Inflation Reduction Act, is being discussed by an energy policy transition team led by Continental Resources founder Harold Hamm and North Dakota Governor Doug Burgum. The move could seriously impact the U.S.’s EV adoption rate, which is already facing challenges.

Tesla’s Surprising Stance

In an unexpected twist, Tesla representatives have reportedly told Trump’s transition committee they support ending the subsidy. Elon Musk, a prominent Trump supporter, previously acknowledged that while the change might “slightly hurt Tesla sales,” it would “devastate” Tesla’s U.S. competitors.

Market Impact

The news has already affected markets, with Tesla’s stock dropping 5.5% to $311.77 in Thursday afternoon trading. The broader auto industry, represented by the Alliance for Automotive Innovation, has pushed back, stating in an October 15 letter that these credits are “critical to cementing the U.S. as a global leader in the future of automotive technology and manufacturing.”

Strategic Motivation

Tesla’s position makes strategic sense when considering market dynamics. While Tesla currently holds nearly 50% of the U.S. EV market share (down from 80% in early 2020), eliminating the tax credit could disproportionately impact its growing competition from traditional automakers like GM, Forden Hyundai.

EVXL’s Take

This potential policy shift represents a critical moment for the U.S. EV market. While Tesla might weather this change due to its established market position and brand strength, it could significantly impact newer EV programs from traditional automakers. The situation highlights the delicate balance between market competition and policy support in driving EV adoption. Recent coverage of both Tesla en GM‘s market strategies suggests that established manufacturers will need to adapt their electrification plans if this credit is eliminated.

What’s your take on this potential policy change? Share your thoughts in the comments below.​​​​​​​​​​​​​​​​