White House Wants to End EV Subsidies ASAP
When asked for a target date, the economic adviser gave his best guess, saying “It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”
According to Reuters, Tesla and GM lobbied Congress for months to lift the cap on electric vehicles or make other changes that would make it easier to move EVs, including new incentives. That’s unlikely to happen until Democrats move in, at which point Congress will be far less inclined to support the Trump administration’s plan to abolish the EV tax credits entirely.
In October, Senator Dean Heller proposed lifting the current cap on electric vehicles eligible for tax credits but phase out the credit for the entire industry in 2022. Two other senators in September proposed lifting the per manufacturer credit and extending the benefit for 10 years.
Also in October, Senator John Barrasso a Republican who chairs the Senate Environment and Public Works Committee, proposed legislation to end the EV tax credit entirely.
Analysts previously suggested that incentivizing electric vehicles to such a great extent may end up creating artificial demand. While that’s likely the point, some are concerned with what might happen when those credits are suddenly stripped away. Automakers are investing vast sums of their own money into developing these vehicles; it would be a huge blow to the industry if the rug was pulled out from under them. However, you could also make the argument that the credits already placed the auto sector on unstable ground.
While Kudlow still seemed mostly steamed with General Motors, he is also aware of the broader impact EV incentives have on the industry. He made clear any changes in subsidies would not just affect GM, knowing the government couldn’t simply target one automaker. “I think legally you just can’t,” he said.
[Image: General Motors]