The $7,500 consumer EV tax credit is geared at boosting competitiveness for the electric vehicle sector in the U.S., which has flagged in recent years amid waning demand and increased competition from overseas manufacturers. Under the Inflation Reduction Act, those purchasing EVs between 2023 and 2032 became eligible for the credit, according to the Internal Revenue Service.

The incoming Trump administration’s potential plan to remove the consumer credit was first reported by Reuters Friday, leading to wide criticism from industry professionals who argue its removal could harm the ability of EVs to compete within the country.

Removing the consumer credit — as well as a similar EV leasing tax credit — would mean “lost jobs, more pollution, and a strategic advantage to our competitors in a rapidly growing Chinese automotive industry,” Mike Murphy, CEO and founder of the American EV Jobs Alliance, said in a statement included in a Friday press release by the alliance related to the potential plan by the president-elect.

Such credits have helped to spike both demand for and investment into the U.S. EV market, the Alliance argues in the release, citing March data from the Environmental Defense Fund which notes EV investment has risen to $188 billion, and that 200,000 jobs have been created in the sector. As such, the Alliance “plans to vocally oppose these policy measures,” according to the release.

The credits’ removal also has its advocates in the space: most notably, Tesla CEO Elon Musk, who was recently tapped by the president-elect to head the newly-created Department of Government Efficiency, CFO Dive previously reported.

“Take away the subsidies. It will only help Tesla,” Musk tweeted on social media platform X, formerly Twitter, in July in a thread discussing the credit. Musk purchased the site for $44 billion in 2022.

Musk also highlighted Tesla’s profitability during the EV company’s Q3 earnings call in October, where Tesla reported net income of approximately $2.2 billion, noting at the time that “to the best of my knowledge, no EV company is even profitable.”

By far the largest U.S. EV player, Tesla stands apart from other EV makers such as Rivian. Rivian’s stock has gyrated up and down over the past months, with its most recent quarterly results leaving investors feeling mixed.

Rivian reported a net loss of $1.1 billion for the quarter ended Sept. 30, compared to a $1.3 billion loss for the prior year period, according to its shareholder letter. The net loss, though narrowed, also came alongside rising capital expenditures and a revision of annual vehicle production guidance for the EV maker. The latter is related to a shortage for a component in the company’s vehicles began in its Q3 which has “become more acute in recent weeks and continues,” the company said in an Oct. 4 disclosure prior to its Nov. 7 earnings report.

However, last week the EV maker also announced it had finalized plans for a $5.8 billion joint venture with German auto manufacturer Volkswagen, aimed at creating “cutting-edge software and electronics architectures” and scaling up EV platforms, according to a company press release. The joint venture comes after the German automaker funneled $5 billion in much-needed cash to Rivian in June, according to a report by Fortune at the time.

Rivian did not immediately respond to requests for comment regarding McDonough’s trading plan or on how repealing the EV consumer credit would impact their business.

By: DocMemory
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