Trump’s budget kills the federal tax credit for electric vehicles – but will likely fail

The efforts to kill the federal tax credit for electric vehicles are piling up and now Trump’s administration is officially joining the fight with its 2020 budget, which includes ending the tax credit.

Over the past year, Republicans have launched several efforts to end the $7,500 tax credit for electric vehicles, which is already set to phase out for several automakers.

Some Republican senators introduced a new bill just last month to put an end to the federal government’s only subsidy to promote electric vehicles.

A few months prior, the Trump administration also started threatening to end the electric car tax credit and now they have made it official.

Their new 2020 budget would eliminate the tax credit altogether (via Reuters):

“The White House proposed on Monday eliminating a tax credit worth up to $7,500 on the purchase of new electric vehicles, a move it says would save the U.S. government $2.5 billion over a decade.”

That said, the budget is unlikely to pass Congress, which is now controlled by the Democrats.

A coalition led by Tesla, GM, Nissan, and others has been trying to reform the EV federal tax credit to make more fair for every player and boost EV sales for the next few years.

The tax credit is already starting to phase out for several automakers including Tesla and GM.

Those automakers have delivered 200,000 electric vehicles in the US – triggering a phase-out period, but many other automakers still have a ways to go before reaching that number.

It is seen as unfairly disadvantaging early promoters of all-electric vehicles and the coalition is pushing for a timeline during which the tax credit is available for any vehicle instead of a limit per automaker.

Electrek’s Take

Trump’s chances of making this pass are next to zero, but it still shows that the administration is thinking about the industry the wrong way. What were we expecting from someone wanting to “bring back coal”?

I’m the first to admit that the tax credit for EVs is not the ideal way to accelerate EV adoption, but it’s the best we have right now and killing it would be shortsighted.

An ideal solution would be to tax gas-powered cars more to represent the cost they have on the environment and the health of the population, which has a direct financial cost.

Unfortunately, that also has a next to zero chance of passing so the status quo is, unfortunately, the best solution for the US until the political scene becomes a bit more rational.

What do you think? Let us know in the comment section below.