Nov 15, 2024 (MarketLine via COMTEX) --
The proposed repeal is under discussion by a transition team led by oil magnate Harold Hamm and North Dakota Governor Doug Burgum.
President-elect Donald Trump's transition team is working to eliminate the $7,500 consumer tax credit for electric vehicle (EV) purchases, reported Reuters, citing two sources.
This move is potentially part of broader tax reforms and could affect the US transition to electric vehicles.
Tesla has indicated support for ending the subsidy.
Tesla CEO Elon Musk mentioned that while removing the credit might slightly hurt Tesla sales, it would be "devastating" for competitors like General Motors (GM).
Following the news, Tesla's stock fell nearly 6%, and shares of smaller EV rivals like Rivian fell 14%.
The tax credit is part of President Biden's Inflation Reduction Act (IRA).
The repeal is viewed as a way to help fund tax cuts from Trump's first term that are set to expire soon.
The oil and gas industry, including Trump ally Harold Hamm, strongly supports ending the EV credit as part of a broader agenda to increase US oil production and roll back Biden's clean-energy policies.
Musk suggested that losing the subsidy under Trump could ultimately benefit Tesla by making it harder for rivals to compete on price, especially with its manufacturing efficiency.
While Tesla faces competition from Chinese EV makers like BYD, which benefit from generous subsidies in China, the removal of subsidies could help Tesla fend off cheaper Chinese imports in the US.
Critics argue this would disadvantage American automakers struggling to compete with subsidised Chinese EVs.
Detroit automakers, including GM, Ford, and Stellantis, are concerned that losing EV subsidies could hinder their transition to electric vehicles.
With Ford expecting a $5bn loss in its EV operations, and demand for models like the F-150 Lightning struggling even with tax credits, the industry relies on these incentives to make EVs more affordable and competitive, ReuteraEUR(TM)s report said.
The United Auto Workers (UAW) supports BidenaEUR(TM)s pro-EV policies, arguing that repealing the subsidies could jeopardise hundreds of thousands of jobs.
GM, which has already received significant manufacturing credits, aims to reduce EV losses by up to $4bn next year.
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