The Fueling of the Electric Vehicle Tax Credit: Donald Trump’s 2020 EPA Action, and the Road to the Next Big Three Autonomous Cities

Just to start out: the federal EV tax credit is still alive and kicking. It wasn’t killed by the power of Donald Trump’s pen. The tax credit — $7,500 for a new EV, $4,500 for a used one — was passed by Congress as part of the Inflation Reduction Act, and it would take another act of Congress to do away with it.

The good news is that Congress is very likely to end the tax credit at some point in the future. The credit has been killed off many times in the past by Republican lawmakers. There were efforts made but they never materialized since Democrats control the Senate and Joe Biden was in the White House.

“It’ll be hard to say how the auto industry will respond to that,” said Kathy Harris, director of clean vehicles at the Natural Resources Defense Council. “But I think what we’ve seen is that these regulations for decades, as EPA has put them out, have really provided significant benefits to not only the auto industry, but also to Americans, to Americans’ wallets, and to public health as well.”

You will notice that the auto industry seems a bit upset about the changes. While all the billionaire moguls of Silicon Valley came out to celebrate Trump’s inauguration, the Big Three automakers of Detroit kept their distance. The only person who made it to DC to kiss the ring was John Elkann, and he left before the inauguration so that he could hang out with Lewis Hamilton. (Who could blame him?)

Trump could fight back from his own party. A letter sent to House Speaker Mike Johnson in August 2024, signed by 18 Republicans, warned that “[p]rematurely repealing energy tax credits… would undermine private investments and stop development that is already ongoing.” The members represent states with some of the highest levels of clean energy investments as a result of the IRA.

From the outset, President Donald Trump’s campaign stated he would end the electric vehicle mandate. The phrase popped up in his executive order hours after being sworn into office.

“The executive order is simply directing the agencies to take a look at the regulations,” Harris said. “So, I think within 30 days is the deadline of when the agencies need to report back with a list of regulations for review.”

Predictions for EVs: How will the US agencies determine their impact and what they can do about them? (IJPC/C2)

Who knows what will happen next. Will EV sales flatline? Will VW acquire Rivian? Will the Nissan-Honda merger collapse? Will Stellantis go bankrupt? Will Republicans lawmakers, whose districts are actively benefiting Biden’s EV investments, force Trump to reconsider rolling back EV incentives? Will Musk stay in Trump’s good graces long enough to make a living?

Consumers will still be able to buy electric vehicles, even in the meantime, and the automakers will continue to make and sell them. When the stricter emissions standards kick in late next year it usually takes five years for manufacturers to plan and build a car, which means cars following those rules should be built and sold.

Monday’s executive order demands US agencies take a look at their rules related to EVs and determine whether they’re “unduly burdensome” and interfere with consumer choice. Those agencies are supposed to write up those findings into reports, which are due in 30 days.