President-elect Donald Trump’s transition team plans to eliminate the $7,500 electric vehicle tax credit that helps consumers buy cleaner cars while supporting the U.S. auto industry.
Combined with his pledge to roll back auto emissions standards that would force automakers to sell more electric vehicles, cutting the credit would be a major setback for clean air, the climate, consumers, manufacturing jobs, and the U.S. economy. Probably.
Here are five reasons why it’s worth keeping the EV tax credit, and five reasons why eliminating it would be a counterproductive mistake.
Ending the EV tax credit will increase consumer costs.
Although EVs are growing in popularity around the world, most Americans need assistance purchasing a plug-in vehicle because plug-in vehicles still have a higher average price than gasoline-fueled vehicles. That’s the whole idea behind the tax credit, allowing consumers to claim up to $7,500 to offset the purchase price.
This policy has worked, making EVs more affordable and competitive with gasoline-fueled models, and especially helping EV owners save thousands of dollars over the life of their vehicles through reduced fuel and maintenance costs. It has become.
President Biden expanded the program by adding a $4,000 tax credit for the purchase of used electric vehicles. Starting Jan. 1, buyers can also claim a credit at the time of sale and use it toward purchases instead of waiting until they file their taxes. According to the Treasury Department, consumers saved more than $600 million in the first three months of this year alone, equating to an average of $6,900 per vehicle. Electric cars should not be a luxury only available to the wealthy. Keeping the tax credit in place will make these clean, low-maintenance vehicles affordable to more American families.
Tax incentives are a bipartisan solution.
Presidents of both parties have supported federal incentives for clean cars for nearly two decades. This tax credit was established in 2005 under President George W. Bush as a $3,400 incentive to offset the purchase of fuel-efficient hybrid vehicles. In 2008, President Bush signed legislation that extended the loan amount to up to $7,500 for plug-in vehicles.
The credit continued during President Obama’s and Trump’s first terms and grew in popularity each year, saving consumers and businesses approximately $5 billion. This credit was significantly expanded by the Inflation Control Act of 2022, and its continuation will save consumers money while supporting high-paying U.S. auto industry jobs.
EV credits support American jobs.
The automotive industry is a cornerstone of the U.S. economy, providing more than 1 million jobs, and its strength is increasingly dependent on the successful global transition from a gas-fueled past to an electric-powered future. .
The U.S. auto industry wants to maintain the consumer EV tax credit, and automakers don’t want the incoming Trump administration to repeal federal regulations mandating increased sales of EVs. They rightly cite the need for stability and predictability in the industry, as well as the desire to remain competitive and recoup hundreds of billions in investments in the transition to EVs.
Ending the EV tax credit will also hurt U.S. manufacturing. When the credit was expanded under the Inflation Control Act, new rules were also added that limited eligibility to vehicles that were assembled in North America and met other restrictions on sourcing battery parts and critical minerals. The aim was to boost domestic production and reduce supply chain dependence on China. Now is not the time to end policies that give American workers a chance at a better future.
Eliminating trust undermines America’s competitiveness.
Electric vehicles are the future, this is the reality, and U.S. automakers are planning and making huge investments, including more than $100 billion in new electric vehicle and battery factories. But China and other competitors are devoting far more resources to the transition. Automakers including Ford and General Motors have set clear goals to phase out gasoline-powered vehicles and transition to all-electric vehicles. But abandoning policies that support that transition would only cede ground to China, Europe and other rivals.
President Trump’s wealthiest supporter and ally, Elon Musk, has expressed support for eliminating the EV tax credit, even though he owns a Tesla. Because while it may hurt Trump’s business, it will hurt his competitors even more. But our nation’s economic future depends on a healthy and robust American EV market that offers a diverse range of products at affordable prices. It would be unwise to spoil it.
A less competitive U.S. electric vehicle sector will also increase the country’s dependence on foreign oil. Oil companies that supported Mr. Trump’s re-election (he promoted pro-fossil fuel policies in his first term) have reversed their pro-EV policies, tied consumers to big oil, and left them trapped in volatile gas prices. By leaving it alone, you will be the main beneficiary.
We need EVs to fight global warming.
Of course, the most important reason to maintain the tax credit is to encourage the transition to non-polluting vehicles. Transportation is the largest source of global warming pollution in the United States, and we cannot effectively combat climate change without reducing emissions that worsen storms, wildfires, heat waves, and droughts. you can’t.
Even Mr. Trump, who has dismissed global warming as a “hoax” and attacked EVs during the campaign by stoking baseless consumer fears, has said that the future is electric and that American businesses, consumers, and workers should You should be able to see how the company can secure its place in the field of electric vehicles. That future or being left behind.
