Trump’s transition team aims to kill Biden’s EV tax bill in the US: Report | Automotive Industry News

US President-elect Donald Trump’s team plans to kill the $7,500 consumer tax credit for electric vehicle purchases as part of a broader tax reform bill, Reuters news agency reported, citing two sources with direct knowledge of the matter.

Eliminating the tax credit could have a major impact on the electric vehicle (EV) transition in the United States. Yet representatives of Tesla — the nation’s largest EV seller — have told Trump’s transition committee they support ending the subsidy, said the two sources, who spoke on condition of anonymity.

Tesla CEO Elon Musk, one of Trump’s biggest supporters and the world’s richest man, said earlier this year that killing the subsidy might hurt Tesla’s sales, but would destroy its US EV rivals, including moribund automakers like General Motors.

Tesla shares fell 5.5 percent to $311.77 in afternoon trading Thursday.

Repealing this subsidy, which was a step in the signing of the Inflation Reduction Act (IRA) of President Joe Biden, is being discussed in the meetings of the reform team on energy policy led by oil billionaire Harold Hamm, the founder of Continental Resources, and the Governor of North Dakota Doug. Burgum, both sources said.

The group has held several meetings since his November 5 election victory, including some at his Mar-a-Lago estate in Florida, where Musk has spent much of his time since the election.

Representatives for Tesla, GM, Ford, Stellantis and Trump’s transition team did not immediately respond to requests for comment.

The Alliance for Automotive Innovation, a trade group that represents nearly every major automaker except Tesla, also did not immediately respond. The coalition last month in an October 15 letter urged the US Congress to keep the EV bills, calling them “essential to strengthening the US as a global leader in the future of automotive technology and manufacturing.”

Trump repeatedly promised to end Biden’s “EV mandate” on the campaign trail, without specifying specific intended policies.

The energy reform task force has determined that some of the clean energy policies in Biden’s IRA will be difficult to reverse as programs begin to allocate money, including in Republican-controlled states where the programs are popular, the sources said. .

Trump’s energy transition team views the consumer EV credit as an easy option, believing that eliminating it would gain broad support in the Republican-controlled Congress as part of a larger tax reform bill.

Trump needs to save money from killing the debt to help pay for the extension of his billions of dollars in tax cuts that will expire at the start of his term, the two sources said. Congressional Republicans are set to take up a comprehensive tax measure as one of their first actions.

Members of the transition team expect the Republican-controlled Congress to use a legislative mechanism known as reconciliation to avoid relying on Democratic votes. Biden used a similar tactic to get the IRA bill passed.

Killing the EV tax credits is strongly supported by Hamm, a longtime Trump supporter, and much of the broader oil and gas industry.

The president-elect promised before the election to increase US oil production even after reaching record highs and to roll back Biden’s expensive clean energy plans, which, in addition to the EV debt, include subsidies for wind and solar power and mass production. of hydrogen.

It hurt the growing competition

Tesla over the years has been a major beneficiary of EV loans such as the one approved by Biden’s IRA, and similar loans that preceded it. And yet now it may benefit from killing the subsidy because that could hurt EV competitors that are on the rise than Tesla.

Musk himself revealed as much on an earnings call in July when asked about the possibility of losing subsidies, and tax credits for battery manufacturing, under a Trump administration.

Tesla had a market share of less than half of all electric vehicles sold in the third quarter of this year, according to data from Cox Automotive. Other automakers with significant US EV sales such as GM, Ford and Hyundai individually trailed far behind. But Tesla’s US EV rivals have combined in recent years to erode its market share, which surpassed 80 percent in the first quarter of 2020.