Tax credits intended to encourage more people to buy American-made electric vehicles might be unplugged soon after President-elect Donald Trump reenters the White House, according to a Thursday report from Reuters.
The Republican’s presidential transition team is reportedly planning to kill the $7,500 consumer EV tax credit program President Joe Biden signed into law in 2022. Trump’s campaign did not respond to a request for comment. Reuters reported that killing the credit is part of a broader tax overhaul, citing two unnamed people with direct knowledge of the plan.
The tax credit and other federal incentives targeting domestic EV production have played a role in Georgia’s rise as a national leader in the electrification of auto travel. The state’s two largest economic development projects are both EV factories, and Georgia has also landed numerous auto suppliers, battery factories and other corporate investments across the battery supply chain.
Though both Georgia EV factories were announced before Biden signed the new credits into law, Biden campaigned on electrifying America’s automotive industry and many companies began plans to re-shore EV manufacturing and supply chains in anticipation of new incentives.
Credit: Hyosub Shin/AJC
Credit: Hyosub Shin/AJC
A spokesman for Gov. Brian Kemp, who has heavily recruited electric vehicle and battery plants, cheered the move and took aim at the Biden administration for policies he said resulted in government picking “winners and losers.”
The credits, part of Biden’s signature health and climate bill known as the Inflation Reduction Act, are also designed to lower the initial cost of an EV compared to conventional vehicles to encourage consumer adoption.
“Ending the federal incentives would seriously damage the American auto industry, risk hundreds of thousands of American jobs and benefit our adversaries,” the Electrification Coalition, an environmental nonprofit, said in a statement.
If axed by the Trump administration, it could be a blow to manufacturers that have poured billions into transitioning their fleets to electric propulsion. EV sales are growing but not as quickly as many automakers and experts anticipated.
The IRA subsidy, which effectively lowered the sticker price of new EVs by up to $7,500 for qualifying customers, was also intended to push automakers to source their battery components from U.S. allies and establish manufacturing in North America.
“The rest of the global automotive industry is moving in this direction,” said Kevin Ketels, an assistant professor of global supply chain management at Wayne State University in Detroit. He said if this credit is retracted, the U.S. “will be the one advanced country pulling back.”
‘A demand signal’
Hyundai Motor Group, which recently opened its $7.6 billion EV factory near Savannah, qualified for earlier credits that did not have sourcing requirements. But Hyundai accelerated construction of the Georgia factory after the IRA was signed to qualify for the new incentives. The Korean automaker, which didn’t respond to a request for comment, is pursuing permits to allow for hybrid vehicles to be built at the 16 million-square-foot factory in addition to EVs.
The Zero Emission Transportation Association, a lobbying group for the EV industry, said in a statement that federal tax credits have helped establish the “battery belt,” stretching from Georgia through Kentucky to America’s automobile stalwart Michigan.
Credit: Courtesy Hyundai Motor Group Metaplant America
Credit: Courtesy Hyundai Motor Group Metaplant America
“If the United States is going to continue to fight to bring those jobs here and actually compete to win against China, there needs to be a demand signal — like the New Clean Vehicle Tax Credit — aligned with that goal,” ZETA said in a statement. “Otherwise we would be undercutting those investments and hurting American job growth.”
The organization was founded in 2020 by Uber, Tesla and several EV startups, including Rivian, which plans to build a $5 billion factory an hour east of Atlanta. Rivian declined to comment.
Credit: Courtesy Rivian
Credit: Courtesy Rivian
Most Rivian models currently don’t qualify for the tax credits. The IRA provides a $7,500 per vehicle tax credit for pickups, SUVs and vans priced less than $80,000. The ceiling is $55,000 for other vehicles. There’s also an income cap of $150,000 for individual purchasers to qualify.
“Given the price point of our vehicles and the overall income levels (to qualify for the tax credits), most of our customers don’t qualify on a finance or cash purchase,” Claire McDonough, Rivian’s chief financial officer, said last week during the company’s third-quarter earnings call.
But Rivian’s next vehicle, the lower priced R2 crossover, is expected to qualify, and would broaden Rivian’s customer base to more price-conscious consumers.
The California-based automaker indefinitely paused its construction timeline for the Georgia factory to shore up its finances. But its leaders say the Georgia factory is a vital part of the company’s plan to scale.
On Tuesday, Rivian and German auto giant Volkswagen finalized a $5.8 billion software partnership, which both companies said will accelerate their EV efforts. Rivian also recently applied for a federal loan to kickstart factory construction in 2026.
Incentive or intervention?
Both Rivian and Hyundai received nine-figure incentive packages from state and local officials to select Georgia sites for their factories. A Kemp spokesman said the state’s e-mobility industry was already humming before “the federal government’s intervention.”
“The governor remains vocally opposed to the Biden administration’s decision to not only pick winners and losers but impose counterproductive mandates that disadvantage Georgia-based auto manufacturers and disincentivizes organic consumer adoption of electric vehicles,” Kemp’s spokesman Garrison Douglas said in a statement.
Georgia ranked in June as the Southeast state to receive the most manufacturing investment and anticipated jobs from the EV sector, according to the Southern Alliance for Clean Energy. The Peach State was second in the region for EV sales behind Florida, but the entire southeast lagged the national average for adoption. Among all states, Georgia ranked 22nd.
Credit: Courtesy Southern Alliance for Clean Energy
Credit: Courtesy Southern Alliance for Clean Energy
According to Reuters, EV pioneer and market leader Tesla is also on board with eliminating the tax credit, citing the two unnamed individuals. Tesla CEO Elon Musk has been a vocal supporter and donor to Trump’s reelection campaign.
Earlier this year, Musk said killing the subsidy might hurt Tesla sales, but it would further devastate its American EV competitors. Tesla lost its majority EV share by the end of June as legacy automakers increased their fully electric fleets.
Erin Keating, Cox Automotive’s executive analyst, said the credit has helped juice EV sales. But she said, “We believe, with or without government-backed sales incentives, the auto industry will continue to move toward electrification in the coming years and decades.”
The Alliance for Automotive Innovation, a trade group representing nearly all major automakers besides Tesla, wrote an Oct. 15 letter urging Congress to retain the EV tax credits. The organization, which declined to comment on Reuters’ report, wrote the credits are “critical to cementing the U.S. as a global leader in the future of automotive technology and manufacturing.”
The American Fuel & Petrochemical Manufacturers, a gas and oil lobbying group, said the credit “is bad policy and a poor use of taxpayer dollars.” The group opposes vehicle emissions standards that will push automakers to incorporate more plug-in vehicles into their fleets, which the oil trade group and Trump have repeatedly called a federal “EV mandate.”
Ketels with Wayne State said any policy decision to slow EV adoption will only help China and other countries leave the U.S. in the dust.
“There’s no turning back. It doesn’t matter what this administration does,” he said. “The industry simply cannot, for the long-term future, disregard the development of electric vehicles because this is where the global auto industry is going.”
Cox Enterprises, the owner of The Atlanta Journal-Constitution and Cox Automotive, also owns a 3% stake in Rivian.
