Automakers are already preparing for the federal government stop electric vehicle tax incentives, lobbying for a gradual phaseout rather than an abrupt end, Bloomberg reported Tuesday.
Several automakers, including Ford and General Motors, along with industry lobbying groups, have asked the Trump Administration and Republican Congressional lawmakers to preserve some EV incentives from the Biden Administration’s Inflation Reduction Act (IRA) as long as possible, according to the report, which cites anonymous sources familiar with the matter.
The IRA, with its manufacturing incentives and tax credits, was predicted to double EV sales by 2030 vs. the previous forecast. But by all previous accounts, the Trump Administration was aiming to make nixing the federal EV tax credit a priority—with support from Elon Musk and Tesla.
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According to this report, one of the ideas being discussed in the event that Trump eliminates it is a three-year credit sunset that would buy more time to reduce costs of new EVs and make the loss of the tax credit less impactful.
Automakers are reportedly also rallying to keep the so-called leasing loophole that allows automakers with captive financing companies to get a $7,500 tax credit for leased vehicles, and pass the savings on to the customer. This allows for an equivalent discount on EVs that wouldn’t normally qualify for the credit due to price, battery-materials sourcing, or the customer’s income.
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That led to a surge in EV leasing in recent years—with federal money subsidizing luxury EVs built in other countries. That’s likely not going to be a winning argument in Congress, where the IRA’s EV tax credit barely squeaked through the first time around.
Even if automakers fail to convince Republicans to keep the federal EV tax credit, increased state incentives may help make up for it. California plans to provide its residents with $7,500 rebates if Trump kills the tax credit, but it’s seeking to exclude Tesla, ostensibly to provide more incentives to brands with less market share in order to promote competition.
