US auto stocks and Asian battery makers took a hit after reports surfaced that President-elect Donald Trump is considering ending a key consumer tax credit designed to promote the adoption of electric vehicles. The proposed elimination of the $7,500 subsidy is part of a broader tax-reform effort being discussed by Trump’s transition team. This move could have a significant impact on the electric vehicle market in the US, which has already faced challenges due to high vehicle prices and limited charging infrastructure.
If the subsidy is repealed, it would undermine President Joe Biden’s climate bill, the Inflation Reduction Act, which includes provisions to support electric vehicle adoption. Trump has indicated his intention to roll back Biden’s EV policies, citing a mandate from the American people. However, repealing the IRA would require Congressional approval, as the law was passed on a party-line vote in 2022.
The potential elimination of the tax credit has already caused a ripple effect in the market, with shares of Rivian Automotive Inc. and Tesla dropping significantly. Asian battery makers like LG Energy Solution and SK Innovation Co. also saw their stocks slide in response to the news. Analysts warn that without alternative incentives in place, the US EV market could suffer a setback in terms of sales and adoption.
Despite the potential challenges, Tesla CEO Elon Musk remains optimistic about the company’s position in the market. Musk, who has close ties to Trump, has advocated for an end to all government subsidies, including those for EVs, oil, and gas. His stance reflects a broader debate about the role of government incentives in shaping the future of the automotive industry.
Overall, the proposed end to the electric vehicle tax credit represents a significant policy shift that could have far-reaching consequences for the industry. As stakeholders await further developments, the future of electric vehicle adoption in the US hangs in the balance.
