President-elect Donald Trump's transition team is planning to delete a $7,500 electric vehicle tax credit that helps consumers buy clean cars while supporting the American auto industry.
Combined with his promise to roll back vehicle emissions standards that require automakers to sell more electric vehicles, ending the credit would be a big step back for clean air, the climate, consumers, manufacturing jobs and the economy. American economy.
Here are five reasons why the EV tax credit is worth keeping and why eliminating it would be a counterproductive mistake.
Ending the electric vehicle tax credit will increase costs for consumers.
Electric vehicles are gaining popularity around the world, but most Americans need help purchasing plug-in vehicles because they still cost more, on average, than their gasoline-powered counterparts. That's the idea behind the tax credit, which allows consumers to claim up to $7,500 to offset the purchase price.
The policy is working, making electric vehicles more affordable and competitive with gasoline-powered models, especially given the thousands of dollars EV owners save over the life of their vehicles due to lower ownership costs. fuel and maintenance.
President Biden expanded the program by adding a $4,000 tax credit for the purchase of a used electric vehicle. Starting January 1, buyers can also claim the credit at the time of sale and use it toward their purchase instead of waiting to file their taxes. Consumers saved more than $600 million in just the first three months of the year, an average of $6,900 per vehicle, according to the Treasury Department. Electric cars should not be a luxury available only to the rich. Maintaining the tax credit will help make these clean, low-maintenance vehicles affordable for more American families.
Tax incentives are a bipartisan solution.
Presidents of both parties have supported federal incentives for cleaner vehicles for nearly two decades. The tax credit was established in 2005 during the George W. Bush administration as a $3,400 incentive to help offset the purchase of a fuel-efficient hybrid vehicle. In 2008, Bush signed legislation that applied it to plug-in vehicles and expanded the credit up to $7,500.
The credit continued during the first terms of President Obama and President Trump, during which grew in popularity every yearsaving consumers and businesses around $5 billion. The credit got a major expansion with the Inflation Reduction Act in 2022, and continuing it will save consumers money while helping support good-paying jobs in the U.S. auto industry.
Electric Vehicle Credit Supports American Jobs.
The automotive industry is a cornerstone of the U.S. economy, providing more than 1 million jobs, and its strength increasingly depends on its success in the global transition from a gas-powered past to an electric-powered future.
The American automobile industry wants to maintain the consumer tax credit for electric vehicles, and automakers don't want the incoming Trump administration eliminate federal rules requiring them to sell more electric vehicles. They have understandably cited the need for stability and predictability for the industry, as well as the desire to remain competitive and recoup hundreds of billions of investments in the transition to electric vehicles.
Ending the electric vehicle tax credit would also hurt the American manufacturing industry. When the credit was expanded under the Inflation Reduction Act, new rules were also added to restrict eligibility to vehicles assembled in North America and comply with other restrictions on the sourcing of crucial battery parts and minerals. The goal was to encourage domestic production and reduce supply chain dependence on China. Now is not the time to stop policies that give American workers a chance at a better future.
Ending credit hurts America's competitiveness.
Electric vehicles are the future, and that's a reality American automakers are planning and making huge investments, including more than $100 billion in new electric vehicle factories and battery plants. But China and other competitors are investing far more resources in that transition. Automakers, including Ford and General Motors, have set clear goals to phase out gasoline-powered cars and transition to all-electric fleets. But ending policies that support that transition will only cede ground to China, Europe and other rivals.
Trump's richest supporter and associate, Elon Musk, has expressed support for ending tax credits for electric vehicles, despite owning Tesla, because while it could hurt his business, it would hurt his competitors more. But our nation's economic future depends on a healthy, robust market for American-made electric vehicles, with diverse offerings at affordable prices. It would be reckless to undermine that.
A less competitive U.S. electric vehicle sector will also make the country more dependent on foreign oil. Oil companies, which supported Trump's re-election (he pushed a pro-fossil fuel agenda during his first term), would be the main beneficiaries of reversing pro-EV policies, keeping consumers tied to the big companies. oil companies and captive to their volatile gas prices.
We need electric vehicles to fight global warming.
The most important reason to maintain the tax credit, of course, is that it helps the transition to pollution-free vehicles. Transportation is the nation's biggest source of planet-warming pollution, and we can't effectively fight climate change without reducing emissions that are worsening storms, wildfires, heat waves and droughts.
Even Trump, who has dismissed global warming as a “hoax” and attacked electric vehicles by stoking unfounded consumer fears during his campaign, should be able to see that the future is electric and that American businesses, consumers and workers They can make a place for themselves in the future. that future or be left behind.
