Trump transition team plans to kill Biden’s electric vehicle tax credit

Donald Trump’s transition team is planning to kill the $7,500 consumer tax credit for electric-vehicle purchases as part of broader tax-reform legislation, two sources with direct knowledge of the matter told Reuters.

Ending the tax credit could have grave implications for an already stalling US EV transition. And yet representatives of Tesla – by far the nation’s biggest EV maker – have told a Trump-transition committee they support ending the subsidy, said the two sources, speaking on condition of anonymity.

Tesla’s CEO, Elon Musk, one of the president-elect’s biggest backers and the world’s richest person, said in July that killing the subsidy might slightly hurt Tesla sales but would be “devastating” to its US EV competitors, which include legacy automakers such as General Motors.

Shares of Tesla ended nearly 6% lower at $311.18, while shares of smaller EV rival Rivian closed down 14% at $10.31. Lucid, another EV maker, tumbled 5% to $2.08.

Repealing the subsidy, a signature measure of US president Joe Biden’s Inflation Reduction Act (IRA), is being discussed in meetings by an energy-policy transition team led by the billionaire oilman Harold Hamm, founder of Continental Resources, and the Republican North Dakota governor, Doug Burgum, the two sources said.

Burgum was nominated by Trump late on Thursday to be his interior secretary.

The group has met several times since Trump’s 5 November election victory, including at his Florida Mar-a-Lago club, where Musk has also spent considerable time since the election.

Representatives of Tesla and Ford did not respond to requests for comment. GM and Stellantis declined to comment.

The Alliance for Automotive Innovation urged Congress in a 15 October letter to retain the EV tax credits, calling them “critical to cementing the US as a global leader” in future auto manufacturing.

Jennifer Granholm, US energy secretary, said on Friday that cancelling the credits would make the US less competitive.

“It would be so counterproductive,” she told reporters at the Cop29 climate conference in Baku when asked about the Reuters report. “You eliminate these credits, and what do you do? You end up ceding the territory to other countries, particularly China.”

The Trump transition team did not comment on the fate of the EV tax credit but said in a statement that the president-elect would deliver on “promises he made on the campaign trail”.

Trump campaigned on ending what he called Democrat Biden’s “EV mandate,” without spelling out specific targeted policies.