The Trump administration has fulfilled one of the promises President Donald Trump made during his second presidential campaign: eliminating the federal tax credit for electric vehicle purchases. In a move that will undoubtedly have major repercussions for America’s nascent electric vehicle industry, the U.S. House has voted to eliminate federal EV tax credits. These credits of up to $7,500 were critical to boosting electric vehicle adoption in the country, and their loss will significantly affect battery electric vehicle (BEV) sales in the U.S.
President Trump was a vocal critic of the Biden administration’s investments in electric vehicles and public charging infrastructure before returning to the White House for a second term. He referred to former President Biden’s focus on renewable energy as the “green new scam” and vowed to pull back federal funds dedicated to climate action if elected. The GOP president began undoing the previous administration’s climate-related policies as soon as he took office, eventually instructing states to stop constructing public EV charging infrastructure using federal funds.
The GOP administration has now delivered a potentially catastrophic blow to the country’s fledgling electric vehicle market by eliminating the federal tax credits that allowed thousands of Americans to buy electric cars. Without the $7,500 tax credit, interested buyers will have to dig deeper into their pockets if they want to purchase a battery electric car. Buyers who couldn’t afford an EV without the tax credit may opt for internal combustion engine (ICE) alternatives, slowing down the country’s transition to electric cars and contributing to air pollution.
House lawmakers have approved a bill to eliminate the $7,500 tax credit and other clean energy tax credits included in the 2022 Inflation Reduction Act, just days after the Senate blocked California’s electric vehicle mandate by revoking a Biden-era waiver that allowed the state to set its own tailpipe emission standards.
Most carmakers in the country will lose the federal EV tax credit immediately, while those that haven’t sold 200,000 electric cars can retain the credit until December 31, 2026. The measure would also scrap the $4,000 tax credit for used electric vehicle purchases and eliminate incentives for companies that build battery storage, wind, and solar energy projects. It will impose an annual $250 tax on electric vehicle owners (and $100 on hybrid owners) to help fund infrastructure and road improvements.
Trump’s vendetta against clean energy and electric cars poses a serious threat to America’s transition to a green economy. It could weaken several emerging industries, discourage innovation, and make the U.S. fall behind competitors like China and the EU, both of which are doubling down on clean energy to strengthen their economies and reduce emissions.
Manufacturers like Mullen Automotive Inc. (NASDAQ: MULN) will have to quickly come up with new strategies to make their models more affordable if they hope to maintain their current market momentum.
NOTE TO INVESTORS: The latest news and updates relating to Mullen Automotive Inc. (NASDAQ: MULN) are available in the company’s newsroom at https://ibn.fm/MULN
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