thegreatdivide
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Robbing Peter (US EV industry) to pay Paul (tax department):
(Inside EVs global)
Killing the $7,500 credit would deal a major blow to EV buyers and manufacturers. But trashing it won't be easy.
The President-elect seems to be sticking to at least one goal so far: unraveling Joe Biden’s policies that prop up America’s electric vehicle industry. Reuters on Thursday reported that the Trump transition team plans to kill the $7,500 consumer EV tax credit, a move that would drive up vehicle costs and make the U.S auto industry’s tough transition to EVs—one that is happening globally—even rockier.
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Tesla may be the only automaker that stands to benefit from Trump’s plans. It turns a handsome profit selling electric cars and owns about half the U.S. EV market. So, while the axing of the consumer tax credit would probably hurt its sales to some degree, it would hurt its competitors more. Indeed, Reuters reported on Thursday that Tesla supports the Trump team’s plan. And that’s not so surprising, given Trump’s increasingly cozy relationship with Tesla CEO Elon Musk.
But the non-Tesla firms that constitute the backbone of U.S. manufacturing won’t let these tax credits go without a fight. After all, they’ve invested far too much in EV development and domestic EV factories—in part to make vehicles that qualify for the tax credit—to go quietly. That’s only part of why tossing 30D (as the tax credit is known) in the garbage may be harder than it looks.
Congress And Big EV Investments Complicate Things
EVs are more of a political football than ever, but they’re also far more ingrained in the U.S. and global economies. The EV tax credit survived the last Trump presidency, and it may prove just as durable this time around.
One big reason: It’s not just a handout to electric car buyers. Rather, it’s part of a complex web of policies aimed at supporting domestic car manufacturing and standing up to China’s fearsome EV and battery industries. Furthermore, it’s primarily Republican districts that stand to benefit from the billions of dollars going to EV investments and the tens of thousands of jobs they’ll create.
Hyundai’s new factory is the largest investment project the state of Georgia has ever seen, and the EVs produced there will qualify for the tax credit. Toyota is bringing battery manufacturing to Kentucky. BMW, Volvo and Scout Motors, a new offshoot of Volkswagen, are investing in EV operations in South Carolina. Any major attack on 30D and other IRA provisions could slow down future investments.
"If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal—like the New Clean Vehicle Tax Credit—aligned with that goal, otherwise we would be undercutting those investments and hurting American job growth,” Albert Gore, executive director of the Zero Emission Transportation Association, a trade group, said in a statement on Friday.
Trump wants to kill the tax credit to fund tax cuts, Reuters reports, and for that he needs Congress. It would only take a handful of Republican lawmakers—the party has just a slim majority in the House—to gum up the works. And there very well may be enough representatives who don’t want to jeopardize transformative investments in their districts, or who believe strongly enough that the U.S. shouldn’t cede the future of car manufacturing to its biggest global adversary.
After all, without the EV tax credit, manufacturers won’t be under nearly the same pressure not to use Chinese-sourced batteries and minerals. They’ll just buy whatever’s cheapest, which would likely come from China.
So, there are strong tides that could keep the tax credit in place.
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