If you’re buying or leasing an electric vehicle (EV) and want to take advantage of the Biden administration’s $7,500 tax incentive, you’ll need to act soon. Reuters reported, citing people with direct knowledge of the matter, that the incoming Trump administration’s transition team is already planning to eliminate the tax incentive for EV purchases.
Under the Biden administration’s Inflation Control Act (IRA), American-made electric vehicles with batteries and other key components will be eligible for a tax credit when purchased or leased. Electric vehicles recently accounted for 6.8% of all vehicles sold in the U.S., up 1.6% from 2022, when the IRA was passed. By some estimates, the share of electric vehicles in the U.S. market is expected to grow to 33% by 2030. However, following the results of the US presidential election, these forecasts have now fallen to 28% of the market.
Despite the expected decline in electric vehicle sales, President Trump’s plan to eliminate incentives has been well received by officials at Tesla, America’s best-selling electric car maker, according to people cited in a Reuters report. Tesla CEO Elon Musk was recently appointed secretary of the new “Department of Government Efficiency” created by the new administration.
In July, Musk was asked if he thought the elimination of incentives could have a negative impact on Tesla’s sales.
“It will have some impact, but it will be devastating for our competitors and a little bit for Tesla,” Musk said in a conference call with investors. “In the long run, this will probably actually help Tesla,” he added.
In addition to the tax incentives, the Biden administration this year imposed 100 percent tariffs on Chinese-made electric vehicles, which are at the forefront of the global race to make electric cars more affordable. Keeping them out of the U.S. would already limit competition and set a floor on domestic electric car prices.
Tesla CEO Elon Musk recently said it would be “pointless” to lower the price of Tesla’s standard model to $25,000. Musk said Tesla believes “the future is autonomous,” referring to the recent launch of its self-driving robotaxis.
Meanwhile, some rival electric car makers are trying to enter the affordable market more aggressively in the U.S. General Motors has already released the Chevrolet Equinox EV, priced at $27,500 including federal tax credits. Volkswagen of America plans to launch an electric vehicle in the US for under $35,000 by 2027.
