Donald Trump’s transition team is reportedly planning to cancel the $7,500 tax credit for the purchase of electric vehicles (EVs) as part of broader tax reform, according to two sources directly familiar with the discussions who spoke to Reuters.
The potential elimination of the tax credit could pose a significant challenge to the already slow progress of the U.S. transition to electric vehicles. Nevertheless, representatives of Tesla, the country’s largest electric vehicle manufacturer, expressed support for eliminating the subsidy during discussions with Trump’s transition committee, revealed the sources, who requested condition of anonymity.
Tesla’s CEO, Elon Musk—one of the president-elect’s most prominent supporters and the world’s wealthiest individual—stated in July that removing the subsidy might have a minor impact on Tesla’s sales but would be “devastating” for its U.S. EV competitors, including established automakers like General Motors.
Tesla’s shares closed down nearly 6% at $311.18, while smaller EV rival Rivian saw its stock plummet 14% to $10.31. Shares of Lucid, another EV manufacturer, dropped 5% to $2.08.
According to the two sources, discussions about repealing the subsidy—a key component of President Joe Biden’s Inflation Reduction Act (IRA)—are underway within an energy-policy transition team. The team is led by billionaire oil magnate Harold Hamm, founder of Continental Resources, and Republican North Dakota Governor Doug Burgum, who was tapped by Trump as Secretary of the Interior last Thursday.
Since Trump’s election victory on November 5, the group has convened multiple times, including at his Mar-a-Lago club in Florida, where Elon Musk has also spent significant time post-election.
As a matter of fact, Tesla and Ford representatives did not respond to requests for comment, while GM and Stellantis declined to provide statements.
In a letter dated October 15, the Alliance for Automotive Innovation called on Congress to preserve the EV tax credits, describing them as “critical to cementing the US as a global leader” in the future of automobile manufacturing.
U.S. Energy Secretary Jennifer Granholm warned on Friday that eliminating the EV tax credits would weaken America’s competitiveness in the industry.
“It would be so counterproductive,” Granholm told reporters at the Cop29 climate conference in Baku when asked about the Reuters report.
She then added, “You eliminate these credits, and what do you do? You end up ceding the territory to other countries, particularly China.”
While the Trump transition team did not comment specifically on the EV tax credit, it stated that the president-elect intends to fulfill “the promises he made on the campaign trail.”
