Tesla's Potential Win in Trump's EV Tax Credit Repeal

The Trump transition team's plans to eliminate the $7,500 EV tax credit could impact the U.S. EV industry. While it may harm competitors, Tesla might benefit. Experts suggest repealing this credit aids Trump's broader tax reforms but risks U.S. automakers falling behind Chinese EV advancements.

The Trump transition team is aiming to repeal the $7,500 electric vehicle (EV) tax credit as part of a larger tax reform effort, according to sources familiar with the plans. This change could severely impact the EV industry's growth in the U.S., yet Musk's Tesla stands to gain strategically from the subsidy's potential removal.

Musk, who has been a vocal supporter of Trump, acknowledged that killing the subsidy might be problematic for rivals but could ultimately benefit Tesla. Discussions about ending the support, a pivotal part of President Biden's Inflation Reduction Act, are led by influential figures such as oilman Harold Hamm and North Dakota Governor Doug Burgum.

With Congressional Republicans poised to support the repeal via a budget reconciliation process, the decision could help fund Trump's proposed tax cuts. However, experts worry that the move might disadvantage American automakers against well-backed Chinese EV companies, stressing the importance of federal subsidies in maintaining competitive parity.

(With inputs from agencies.)