President-elect Donald Trump is expected to roll back several of the green initiatives implemented under President Biden, including policies designed to incentivize the production and purchase of electric vehicles (EVs). According to reports, the Trump transition team is already exploring the elimination of the $7,500 tax credit for purchasing or leasing certain EV and plug-in hybrid models, a provision included in Biden’s landmark Inflation Reduction Act of 2022.
Dropping the federal subsidy is expected to significantly affect consumers considering an EV purchase, according to Fox Business. “The EV tax credit was intended to make electric vehicles more affordable for the average consumer and they have,” said Scott Kunes, COO for Kunes Auto & RV Group. “We’ve seen EV sales and leases increase significantly as a direct result of the federal tax incentives. Their repeal would once again put those vehicles out of reach for the average consumer.”
Shawn McLaughlin, CEO of Emporia Energy, told FOX Business that industry research indicates most current EV owners were motivated to make the switch as a way to contribute to environmental sustainability. He emphasized that for EV adoption to continue growing, the auto industry must focus on attracting new buyers who are more sensitive to price. “A rollback in government support and incentives for EV adoption will slow the growth of EV sales over the next couple of years by making the current offering of EVs less price competitive,” McLaughlin said.
Even if the tax credit is eliminated, the market will adapt to the needs of EV customers. “With improvements in battery technology and manufacturing, the unsubsidized cost of EVs will reach cost parity of ICE vehicles in 2026-2027, which will start attracting the more cost-sensitive buyers, regardless of the federal EV tax credit,” McLaughlin added, per Fox Business.
Kreg Peeler, founder and CEO of EVject, a company specializing in breakaway EV charging connectors, agrees with the sentiment but predicts a significant shift in the auto industry that will render the debate over EV tax credits irrelevant. “As full autonomy rolls out, car buyers will no longer be the drivers. Fleets will become mainstream,” he predicted. “The majority of travelers will pay for their rides per mile or minute and will not purchase a vehicle of their own.”