President-elect Donald Trump’s transition team is reportedly planning to eliminate the $7,500 consumer tax credit for electric vehicle (EV) purchases, a central provision of the Inflation Reduction Act (IRA). According to Reuters on Nov. 14, the plan was discussed during a meeting led by Harold Hamm, founder of Continental Resources, and Republican North Dakota Governor Doug Burgum, both of whom are key supporters of Trump’s energy policies. The proposal would be part of broader tax reform legislation.
If carried out, the removal of the EV tax credit could harm South Korean automakers, including Hyundai, as well as battery manufacturers that have ramped up investments in the U.S. to benefit from the IRA. The IRA provides a tax credit of up to $7,500 for EVs built with U.S.-sourced batteries and critical minerals.
Trump has long criticized the IRA, and many conservatives oppose the subsidies it provides, with some rejecting the climate change agenda underlying the legislation. Sources told Reuters that Trump’s team could use the savings from eliminating the tax credit to help extend tax cuts from his first term, which are set to expire soon.
Reuters also noted that Tesla, historically the biggest beneficiary of EV subsidies under Biden and previous administrations, may not be significantly affected by the tax credit’s removal. Elon Musk, CEO of Tesla and a key supporter of Trump’s election, has argued that the change would have little impact on Tesla, but could harm competitors like GM. The Financial Times echoed this view, suggesting that eliminating the incentive would likely hurt Tesla’s rivals more than Tesla itself.
The Alliance for Automotive Innovation, which represents U.S. automakers, urged Congress to retain the EV tax credit in a letter on Oct. 15. Both Trump’s team and Tesla declined to comment on the latest reports.
If the tax credit is eliminated, South Korean automakers and battery producers could face a serious setback as U.S. demand for EVs may decline. Trump has also pledged to end Biden’s EV mandate. The IRA has spurred battery manufacturers to make substantial investments in U.S. production facilities, particularly in the “Rust Belt” regions such as Michigan, Ohio, and Georgia. However, there is skepticism about whether the policy can be easily reversed, as these investments have created jobs in key swing states, making the issue politically complicated.
