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Republicans have long opposed the $7,500 federal tax credit for electric vehicles included in the Inflation Reduction Act (IRA). Now, President-elect Donald Trump’s transition team appears to have made that a priority With plans to end the tax break as part of broader tax reform legislationAs reported by Reuters, citing two unnamed sources.
TechCrunch confirmed this information through a source, noting that the transition team appears “firm on the matter.” Reports of the transition team’s intentions have caused the stock price of Rivian and other convertible automakers to plummet. Tesla shares fell 5%, and Rivian shares fell more than 12%.
Despite the apparent risks to Tesla, the company’s CEO Elon Musk (also a Trump ally) has previously supported eliminating subsidies. “Raise the subsidies. It will only help Tesla.” Musk wrote In a July 2024 post on X, the social platform he owns.
It is worth noting that killing the tax break cannot be done with a wave of executive order once Trump gets into office. So called Clean car credit 30Dwhich gives consumers a $7,500 tax credit for certain qualifying electric vehicles, is part of the tax code. This means it must be approved by Congress.
The best chance to remove the tax break is to include it in the tax reform package that is expected to be presented to Congress in the spring. Meanwhile, the Trump administration could use the Treasury Department, which would make it more difficult to obtain the tax credit.
Of course, Republicans will have to evaluate some of the provisions in the electric vehicle tax credit, which is designed to stimulate domestic manufacturing and make the United States less dependent on exports from China. To qualify for the EV tax credit, vehicles must be assembled in the United States, and certain battery components and critical mineral sourcing requirements must also be met. For example, the IRA mandates that at least 50% of the value of certain critical metals in an electric vehicle battery must be sourced and processed in the United States or a trading partner country. This requirement increases by 10% every year until 2027.
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