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The transition team appointed by president-elect Donald Trump has set its sights on the $7,500 EV tax incentive implemented by the Biden administration and plans to axe it as soon as possible, Reuters has reported, citing two unnamed sources.
Trump has repeatedly showed an absence of soft spots for the EV industry and has signaled a radical change in the attitude of the federal government to that industry if he wins. Now that he has, the radical change will soon be underway.
The EV incentive axing will be part of a broader tax reform, the Reuters report noted, adding that the move has been discussed by members of Trump’s transition team including Continental Resources CEO Harold Hamm and North Dakota Governor and new Interior Secretary Doug Burgum.
Shares in EV makers dropped on the news, including Tesla’s, even though Tesla representatives have spoken in favor of the removal of the subsidy. That favor probably has to do with the fact that Tesla is a best-selling EV maker while the Big Auto carmakers are struggling to make a profit on their own electric vehicles. Indeed, per Reuters, Tesla representative said that the removal of the federal subsidy would destroy Big Auto giants.
The removal of the federal tax incentive will likely deal the fatal blow to EV uptake in the United States after demand began to slow down organically amid increasingly complicated rules for carmakers that made fewer of their cars eligible for the incentive in the first place.
The complications stemmed from an attempt by the Biden administration to reduce reliance on foreign component suppliers—read China—obliging carmakers to source their batteries locally in order for their EVs to qualify for the incentives.
These complications added to already existing problems such as lack of enough chargers and prices, which even with incentives are above those for internal combustion engine cars.
