(Bloomberg) — Shares of U.S. automakers fell after Reuters reported that President-elect Donald Trump plans to eliminate a key consumer tax credit aimed at boosting electric vehicle adoption.
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Trump’s transition team has discussed ending the $7,500 subsidy as part of broader tax reform, Reuters said, citing unidentified sources with direct knowledge of the matter. Representatives of Tesla Inc. According to the report, they also support ending the credit.
Removing the subsidy — a key part of President Joe Biden’s climate bill, the Inflation Reduction Act — would deal a significant blow to electric vehicle adoption in the U.S., which has already sputtered due to still-high vehicle prices and the inadequate charging infrastructure. Trump has previously said he would reverse Biden’s EV policy on the first day of his presidency.
“The American people re-elected President Trump by a wide margin, giving him a mandate to fulfill the promises he made during the campaign,” said Karoline Leavitt, spokeswoman for Trump’s transition team. “He will deliver.”
Trump would need congressional approval to repeal the IRA, which was approved in a party-line vote in August 2022. His transition team has found that some of the policies within the law will be difficult to roll back because certain programs have already begun with allocating money. also for Republican-dominated states, according to Reuters.
The shares of Rivian Automotive Inc. were the hardest hit among major EV makers, falling 14% in New York trading, the biggest decline since Feb. 22. Tesla also hit an intraday low after the report, ending the day down 5.8%. The shares of General Motors Co. and Ford Motor Co. fell.
“The Trump administration’s potential elimination of the federal electric vehicle tax credit – without some other form of incentive to replace it – could derail the trajectory of electric vehicle sales in the United States,” said Jessica Caldwell, head of insights at automotive research firm Edmunds. .com, said in a note.
Although Tesla is by far the largest EV seller in the US, CEO Elon Musk has said the company will be better positioned to deal with the potential withdrawal of incentives. The billionaire has joined Trump’s inner circle and taken on a role in helping the new administration cut government spending.
