(Bloomberg) — Shares of US automakers fell after Reuters reported President-elect Donald Trump plans to eliminate the $7,500 consumer tax credit for electric-vehicle purchases.
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Trump’s transition team has been discussing ending the subsidy as part of a broader tax-reform effort, Reuters said, citing unidentified sources with direct knowledge of the matter. Representatives of Tesla Inc. also support ending the credit, according to the report.
Repealing the subsidy — a major component of President Joe Biden’s signature climate bill, the Inflation Reduction Act — would deal a significant blow to EV adoption in the US, which has already sputtered due to still-high vehicle prices and spotty charging infrastructure. Trump has previously said he would reverse Biden’s EV policies on day one of his presidency.
“The American people re-elected President Trump by a resounding margin giving him a mandate to implement the promises he made on the campaign trail,” said Karoline Leavitt, a spokeswoman for Trump’s transition team. “He will deliver.”
Shares of Rivian Automotive Inc. were hardest-hit among major EV makers, plunging as much as 11% in New York trading. Tesla also hit an intraday low following the report, dropping as much as 4.7%. General Motors Co. and Ford Motor Co. shares initially declined before partially rebounding.
While Tesla is by far the top EV seller in the US, Chief Executive Officer Elon Musk has said the company will be better positioned to deal with the potential pullback of incentives. The billionaire has become a member of Trump’s inner circle and accepted a role helping the incoming administration to reduce government spending.
Trump would need Congressional approval to repeal the IRA, which was approved on a party-line vote in August 2022. His transition team has determined some of the policies within the law will be difficult to roll back because certain programs have already started allocating money, including to Republican-dominated states, Reuters said.
–With assistance from Keith Laing and Hadriana Lowenkron.
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