U.S. EV Tax Credit May Be Eliminated Soon

The current federal EV tax credit is expected to get the axe as House Republicans eye spending cuts to help pay for President Trump’s tax package.

Per a recent report from Bloomberg, House Speaker Mike Johnson recently said that the electric vehicle tax credit was more than likely headed for the door, stating, “I think there is a better chance we kill it than save it.” House Republicans hope to cut $2 trillion in spending in the face of $4.5 trillion in lost revenue as a result of Trump’s forthcoming tax cuts.

Although Johnson stopped short of confirming the electric vehicle tax credit’s demise, the move would fall in line with broader developments as Republicans and the Trump administration work to dismantle climate policies enacted by the Biden administration. The current electric vehicle tax credit offers up to $7,500 for electric vehicle buyers, and also covers both used and commercial vehicles. Per Bloomberg, which cites an analysis by Capital Alpha Partners, the credit could cost upwards of $200 billion over 10 years.

Automakers, including General Motors, have heavily leveraged the tax incentive to build momentum towards widespread electric vehicle adoption. However, with the current administration favoring fossil fuels over clean energy subsidies, the credit is expected to be dismissed in the near future. Republicans have also moved to nullify California’s planned 2035 ban on the sale of new gasoline-powered vehicles, while lawmakers are also considering a vast overhaul for hundreds of billions in clean energy tax incentives tied to clean energy and carbon capture.

That all said, several electric vehicle production plants are currently located or under construction in Republican-led districts, leading to dissension as to the best way forward. In fact, 38 House Republicans have expressed support for certain clean energy provisions, with 26 urging for the preservation of tax incentives for nuclear and clean electricity generation.

If repealed, the end of the electric vehicle tax credit would mark a significant reversal of U.S. clean transportation policy and could affect the affordability and market competitiveness of electric vehicles, in particular as legacy automakers look to leverage broad investments in domestic battery plants and electric drivetrain production.