The final chapter of the electric vehicle price war, sparked by Tesla's Elon Musk, hinges on President-elect Donald Trump's plan to eliminate the $7,500 consumer tax credit. Sources with direct knowledge told Reuters that the Trump team has discussed ending the EV tax credit as part of broader tax reform legislation.
Sources indicated that Tesla - the largest EV automaker in the US and the only one not reliant on EV credits for survival - told the Trump transition committee that it fully supports the federal government ending the subsidy.
Here's more from Reuters:
Repealing the subsidy, which has been a signature measure of President Joe Biden's Inflation Reduction Act (IRA), is being discussed in meetings by an energy-policy transition team led by billionaire oilman Harold Hamm, founder of Continental Resources, and North Dakota Governor Doug Burgum, the two sources said.
The group has had several meetings since Trump's Nov. 5 election victory, including some at his Florida Mar-a-Lago club, where Tesla chief executive Elon Musk has also spent considerable time since the election.
In mid-July, Trump stated at a campaign rally that he would "end the Electric Vehicle Mandate on Day One — thereby saving the US auto industry from complete obliteration, and saving US customers thousands of dollars per car."
On X, around that time, Musk explained to the Whole Mars Catalog why repealing the tax credit would only benefit Tesla:
Take away the subsidies. It will only help Tesla.
— Elon Musk (@elonmusk) July 16, 2024
Also, remove subsidies from all industries!
In October, the Alliance for Automotive Innovation, a trade group representing all automotive brands besides Tesla, penned a letter expressing to lawmakers in Congress how crucial the EV tax credit is in "cementing the US as a global leader in the future of automotive technology and manufacturing."
In the markets, Rivian shares tumbled by 10% in the early afternoon, while Tesla shares fell by 3.5%.
We knew the playbook in July. Here it is again: "Musk's strategy to win the EV price war: Build the largest EV business with taxpayer dollars, popularize EVs, allow other startups and OEMs to enter the market, and then support politicians who want to end EV subsidies, crushing the competition and leaving Tesla reigning supreme."