Electric vehicle stocks are falling Thursday after a report detailed the incoming Trump administration’s plans to axe a tax credit for consumers buying cleaner cars.
President-elect Donald Trump’s transition team is planning to get rid of the $7,500 tax credit for EV purchases as part of a broader tax shakeup, Reuters reports. If the credit is removed, the EV transition will likely be hit hard, as prices on numerous models will effectively increase.
Several companies, including Ford Motor Co. and Hyundai Motor Co., have adjusted their plans to ensure that their vehicles qualify for the $7,500 tax credits. In just three months, EV buyers saved $600 million thanks to those credits, the Treasury Department said.
Electric truck and SUV maker Rivian’s (RIVN) stock fell by more than 12% on Thursday, erasing much of the gains that came after Volkswagen (VWAGY) increased its planned investment in their joint venture to $5.8 billion. Lucid’s (LCID) stock price continued its fall from earlier in the day, declining 3%.
Even Tesla (TSLA), which has been riding an election-fueled stock boom to a $1 trillion valuation, saw its stock decline by 5% on Thursday. Analysts see CEO Elon Musk’s close relationship with the president-elect as a boon to the stock; that relationship includes plans to make Musk co-head of the non-governmental Department of Government Efficiency.
Tesla bull and Wedbush Securities analyst Dan Ives said Tuesday evening that it’s “clear that Musk will have a massive role in the Trump White House with his increasing reach clearly across many federal agencies,” adding that he will likely be involved in discussions related to artificial intelligence and tariffs on China.
Read more: Automakers are bracing for Trump — and his anti-EV plans
Tesla representatives told a committee put together by the team that they support ending the subsidy, Reuters reported, echoing comments made by Musk earlier this year, and calling it “devastating” for competitors and a slight hit to Tesla. These meetings have reportedly been led by North Dakota Governor Doug Burgum, a candidate for Trump’s “energy czar,” and Harold Hamm, the billionaire founder of fossil-fuel giant Continental Resource.
Trump has said he wants to scrap the “Green New Scam,” referring to President Joe Biden’s pro-EV policies, including the Inflation Reduction Act (IRA), which is where the tax credits come from. On his first day in office, Trump plans to begin rolling back rules from the Environmental Protection Agency and Transportation Department and expand oil drilling.
