The $7,500 EV tax credit is on Trump’s chopping block

Republicans have long opposed the $7,500 federal tax credit for electric vehicles contained in the Tax Cuts Act. Now, President-elect Donald Trump’s team appears to have made that a top priority with plans to eliminate the tax credit as part of a broader tax reform bill, Reuters reported citing two unnamed sources.

TechCrunch confirmed the information with one source noting that the transition team appears to be “solid on this.” Reports of the reform group’s intentions caused the stock price of Rivian, and other exposed automakers, to drop. Tesla shares fell 5%, while Rivian shares fell more than 12%.

Despite the perceived danger of Tesla, the company’s CEO Elon Musk (who is also a friend of Trump) has supported the removal of subsidies. “Remove the subsidies. It will only help Tesla,” Musk wrote in a July 2024 post on X, the social media platform he owns.

It’s important to note that killing the tax bill won’t be done with high-order publicity if Trump is in office. The so-called 30D Clean Vehicle Credit, which gives consumers a $7,500 tax credit for certain qualifying EVs, is part of the tax code. This means that it must be approved by Congress.

The best chance to eliminate the tax credit would be to include it in the tax reform package expected to go to Congress in the spring. In the meantime, the Trump administration can use the Treasury Department, which will make it more difficult to get the tax credit.

Of course, Republicans will have to examine other provisions established in the EV tax credit, which is designed to encourage domestic manufacturing and make the US less dependent on imports from China. To be eligible for the EV tax credit, the vehicles must be assembled in the United States, and certain battery components and key mineral sourcing requirements must also be met. For example, the IRA mandates that at least 50% of the value of certain minerals essential to an EV battery must be sourced and processed in the US or a trading partner country. That requirement increases by 10% annually through 2027.