President-elect Donald Trump’s intentions to remove a significant consumer tax credit intended to encourage the adoption of electric vehicles were published by Reuters, which caused a decline in U.S. auto stocks and Asian battery manufacturers.
Trump team seeks to eliminate tax credit
Under Trump’s transition team, the $7,500 tax credit for electric vehicle purchases is to be eliminated. A reduction in the tax credit might have a detrimental effect on the struggling EV market in the US. The Biden administration’s Inflation Reduction Act includes a $7,500 new EV purchase subsidy and a $4,000 used vehicle loan.
Since Trump wants to extend tax cuts that are scheduled to expire in 2025, eliminating the tax credit might save the administration a significant amount of money.
Tesla, Rivian Shares Tumble as Report Surfaces
Rivian Automotive Inc.’s stock fell 12% on Thursday, the worst day in months, due to growing worries that the Trump administration may be preparing to eliminate EV tax incentives. Tesla Inc.’s stock, TSLA, also went south, but not as much as its rivals since it is thought to be less reliant on the $7,500 tax credits. Additionally, given that CEO Elon Musk is a well-known Trump advisor, Tesla is anticipated to get additional advantages from the new government.
When the EV manufacturer alarmed investors by predicting that it would produce a little fewer cars this year than it did in 2023, Rivian shares (RIVN) plummeted 12%, their worst day since February 22.
Due to its leadership in EV production, Tesla is thought to be the EV manufacturer least impacted if the tax benefits are eliminated. Because of the size and cost structure of the EV manufacturer, it is believed that the removal of the tax credits and the imposition of tariffs will further solidify Tesla’s position as the industry leader.
