President-elect Trump is swiftly fulfilling his campaign promises in the United States. Sources revealed that Trump’s transition team is planning to eliminate the $7,500 consumer tax credit for purchasing electric vehicles, as part of the new government’s broad tax reform legislation.
According to Reuters on Thursday, two anonymous insiders shared this news, stating that representatives from Tesla, the largest electric car manufacturer in the US, have expressed support for ending this subsidy to Trump’s transition committee.
Trump has consistently criticized the Biden administration’s electric vehicle subsidy policy, pledging during his campaign that if elected and if the Republicans win power in Congress, they will overturn the so-called “EV mandate” and increase oil and gas production.
The electric vehicle subsidy is a hallmark provision of President Biden’s Inflation Reduction Act (IRA).
The Biden administration’s overarching goal is to halve America’s greenhouse gas emissions within ten years. To achieve this goal, the Biden administration has instituted tax incentives and subsidies for purchasing electric vehicles to encourage more people to use them.
In March of this year, the Biden administration announced a measure requiring American automakers and dealers to have half of their new vehicle sales be pure electric or hybrid by 2032.
The US Treasury Department stated in May that within just three months, electric car buyers saved $600 million due to this subsidy.
One of Trump’s biggest supporters, world’s richest person Elon Musk, earlier this year mentioned that ending the subsidy could slightly hurt Tesla sales but could devastate its American electric vehicle competitors, including traditional car makers like General Motors.
Trump’s transition team and Tesla representatives did not immediately respond to Reuters’ requests for comments.
The Alliance for Automotive Innovation, a trade organization representing almost all major car manufacturers (excluding Tesla), also did not immediately respond to Reuters’ requests for comments.
The alliance wrote to Congress on October 15, urging the preservation of the electric vehicle tax credit, stating that it is “crucial for solidifying America’s global leadership position in future automotive technology and manufacturing.”
According to the two sources, the energy policy transition team is discussing abolishing this subsidy, led by oil magnate Harold Hamm, founder of Continental Resources, and North Dakota Governor Doug Burgum.
Republicans plan to use a parliamentary tool called Budget Reconciliation to advance tax reform legislation. This procedure allows Congress to pass relevant laws without relying on Democratic votes, thus avoiding potential filibusters and lengthy debates.
With the federal government’s borrowing costs escalating, debt interest for the 2024 fiscal year exceeded $1 trillion for the first time, posing a significant challenge for Republicans.
House Freedom Caucus Chairman Andy Harris stated, “Our goal is to reclaim around $1 trillion from the so-called Inflation Reduction Act.”