Trump team reportedly plans to eliminate $7,500 EV tax credit

President-elect Donald Trump’s transition team is considering eliminating the $7,500 consumer tax credit for electric vehicle (EV) purchases as part of a broader tax reform package, according to two anonymous sources familiar with the discussions. The credit has been a key policy in encouraging EV adoption in the United States.

Tesla representatives reportedly supported ending the credit in discussions with Trump’s transition committee, according to the same sources. Tesla CEO Elon Musk has previously stated that while removing the subsidy might impact Tesla sales marginally, it would significantly harm competitors like General Motors and other legacy automakers. Tesla has not issued an official comment on the matter.

Discussions about repealing the EV tax credit have reportedly taken place within the energy policy transition team, which is led by oil executive Harold Hamm and North Dakota Governor Doug Burgum. This team has been meeting since Trump’s election victory on November 5, including at the president-elect’s Mar-a-Lago estate in Florida.

The credit has been a focal point of President Joe Biden’s Inflation Reduction Act (IRA), and its removal has drawn criticism from U.S. Energy Secretary Jennifer Granholm, who warned that repealing it could harm the U.S. auto industry and benefit Chinese manufacturers. Granholm made her comments during the COP29 climate conference in Baku, Azerbaijan.

The news has already affected the stock market, with shares of EV manufacturers falling sharply. Rivian Automotive Inc. experienced the steepest decline, with shares dropping up to 11 percent. Tesla shares fell by as much as 4.7 percent, while General Motors and Ford shares saw initial declines before recovering slightly.

The Alliance for Automotive Innovation, a trade group representing most automakers, has advocated for retaining the tax credit, arguing it is essential for maintaining U.S. leadership in automotive technology. The group has not commented on the recent developments.

The transition team reportedly views the EV tax credit as an accessible target for legislative action, particularly in a Republican-controlled Congress. The elimination of the credit is expected to be included in a broader tax reform bill, which may use budget reconciliation to pass without Democratic support.

The proposal aligns with Trump’s campaign promises to roll back clean energy policies from the Biden administration. In addition to targeting the EV credit, Trump has expressed support for expanding U.S. oil production and reducing subsidies for renewable energy.