Nov 14 (Reuters) - President-elect Donald Trump’s transition team is planning to kill the $7,500 consumer tax credit for electric-vehicle purchases as part of broader tax-reform legislation, two sources with direct knowledge of the matter told Reuters.
Ending the tax credit could have grave implications for an already stalling U.S. EV transition. And yet representatives of Tesla - by far the nation’s largest EV seller - have told a Trump-transition committee they support ending the subsidy, said the two sources, who spoke on condition of anonymity.
Sure, it’s gonna be bad for for Volvo and Kia/Hyundai. But they have significant overseas markets for their EVs where the price of gas acts as a built in incentive. The real losers are gonna be GM and Ford. Who are now going to have a real hard time justifying keeping EV production going.
That all said the real winners seem like Toyota and Honda. The non-LH demographic buying EVs probably isn’t going to flock to Tesla. That’s just not how it works when you have a deeply polarized nation. They aren’t going to start buying pick up trucks or full sized SUVs either.
They are going to be drawn to more affordable (because of the lack of an expensive battery pack), very fuel efficient hybrid mid-sized cars and SUVs. And of course, Honda and Toyota have a huge lead in that segment (see the best selling vehicles in America list).
I did a lot of 150+ mile round trips on my 4xe where I left at 100 battery and returned at <1. The power differential you speak of wasn’t noticeable to me and I got on it at every light.
You can totally treat it like a hybrid and never plug it in.
I think dealer that will scramble to offload PHEVs and EVs that don’t currently qualify for EV tax rebate. Assuming Musky loves free money, here is how I think, it will play out.
Nov: Musky - “Trump to kill EV tax credit. Buy my cars now, buy my cars now”
Jan: Musky - “We had our best quarter ever. Stocks have never been higher, I’m great”.
Feb: Musky - “Trump has decided to eliminate tax credit for PHEVs and closed leasing loop hole. I have single handedly saved US. EV. auto industry, bow to me.”
Trying to score a Taycan Cross Turismo on the cheap. Looking forward to terrible legislation that will make this possible for me.
Think Elon is excited to cut the tax credit because his cars are low enough quality that he can keep cutting the prices. They’ve sold enough cars to actually cover cost of development and operations so they’re way ahead of the competitions in that regard.
I see an initial surge of used EV pricing going up while new EV prices slowly loft downwards. Dealers will be hesitant to supplement the 7500 credit as a loss just to sell the vehicles. Eventually manufacturers will have to incentivize inventory, just see what Stellantis is doing to American brands in the States right now.
Probably why we see so many brands pulling back on EV production right now in anticipation of having to incentivize their own products that are dumped on dealers.
The EV tax credit was intended to help manufacturers deal with the high upfront costs associated with new research and development. These product cycles are notoriously long and expensive and most of them don’t see a return on their investment until well into the cycles. Sometimes, they don’t even sell enough to cover the R&D costs. That’s the price of doing business in a capitalist society. Sometimes you win, sometimes you lose.
With no EV tax credit, only companies that have already cleared their R&D investments will be profitable and flexible enough to compete in the new EV market. Probably why Elon Musk was so excited to cut the tax credit. he got his so he doesn’t need it anymore and knows it’ll hurt his competition.
