A surge in electric vehicle sales in the final months of last year could continue into 2025 as consumers continue to take advantage of federal tax incentives, according to an Associated Press report.
On Inauguration Day, President Donald Trump signed an executive order titled “Defriding American Energy,” which states that the government “will consider eliminating unfair subsidies and other ill-conceived government-imposed market distortions targeting other technologies.” ”
During his campaign, Trump's team said it planned to end the Biden administration's $7,500 tax credit for purchasing or leasing an EV, although it did not provide a timeline for doing so.
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Americans rushed to take advantage of the incentive, driving a surge of more than 15% in EV sales in the fourth quarter, according to Cox Automotive.
Recent surveys show that incentives have played a major role in driving EV sales in recent years and that the majority of Americans support government incentives to purchase an EV.
Meanwhile, language in Trump's executive order that says his administration is still considering its options leaves room for ambiguity about the timing of its application.
“Temporarily, electric vehicle sales may soar as the auto cow army rushes to take advantage of existing tax credits,” the Associated Press report said.
To repeal the EV tax credit, the Trump administration must seek approval from Congress. The trial is likely to take place as part of broader negotiations over extending Trump's first tax cuts, which expire towards the end of 2025.
It's also not entirely clear whether the Trump administration will seek to end the entire $7,500 EV tax incentive. To maintain the incentive to purchase an EV, the restrictions apply to high-income households and EVs with non-U.S. batteries. However, these restrictions do not apply to leasing an EV.
According to Cox Automotive, members of the Trump administration are particularly interested in “ending this leasing loophole, which was created in part to appease Korean and Japanese automakers that have invested billions in U.S. debt.”
Ending rebates and other subsidies for electric vehicles is also likely to pose challenges, whether legal or political, from various players.
The Zero Emission Transportation Association (Zeta), a trade group whose members include Tesla, Waymo, Rivian and Uber, has highlighted incentives for both the production and sale of EVs.
Zeta says the incentives for EV and battery makers have led to huge investments and jobs in Republican states like Ohio, Kentucky, Michigan and Georgia.
