“We should get rid of all credits”

Topline

Elon Musk said Thursday he supports eliminating a $7,500 tax credit for electric vehicle buyers, reiterating a position he expressed in July that could help Tesla – as Trump’s transition team is reportedly mulling that prospect , despite opposition from most in the auto industry.

Elon Musk with his son and Vivek Ramaswamy make their way to a meeting at the Capitol Visitor … (+) Center with House and Senate Republicans to discuss President-elect Donald Trump’s “Department of Government Efficiency” on Thursday, December 5, 2024. (Tom Williams/CQ-Roll Call, Inc via Getty Images)

CQ Roll Call, Inc via Getty Images

Important facts

Musk said, “I think we should eliminate all credits” when asked by a reporter on Capitol Hill on Thursday whether he supported eliminating the electric vehicle tax credit, Politico reported.

Musk made a similar statement in July, writing, “Take away the subsidies. It will only help Tesla,” said a post on X, formerly known as Twitter.

Experts say eliminating the tax credit could potentially hurt other electric vehicle makers more than Tesla, the world’s largest electric vehicle maker, and lead to less competition for the company, leading to a potential drop in demand that could prompt other electric vehicle makers to do so to reduce production.

Trump campaigned on ending Biden’s “EV mandate” – although he did not specifically target the tax credit, his transition team is reportedly planning to eliminate it, Reuters reported last month, citing unnamed sources.

Main critic

The Alliance for Automotive Innovation, which represents all major global automakers but not Tesla, urged Congress in an October letter to maintain the tax credit, citing concerns about increasing competition from Chinese manufacturers, CNN reported. The group also wrote a letter to Trump’s transition team in November urging his administration to maintain the tax credit, Reuters reported.

Important background

Musk made the remarks while on Capitol Hill Thursday to meet with lawmakers about plans for the Department of Government Efficiency. Trump appointed him and Vivek Ramaswamy to a newly created advisory board to cut government spending. The electric vehicle tax credit applies to purchases of new electric vehicles and was created as part of Biden’s signed Inflation Reduction Act, which also provides a tax credit of up to $4,000 for purchases of used electric vehicles. The Biden administration reported in July that the tax credit contributed to a 20% drop in electric vehicle prices compared to the previous year. The administration also issued new rules in March aimed at increasing the share of electric vehicles sold in the U.S. from 7.6% of all auto sales to 56%, furthering Biden’s push to cut greenhouse gas emissions in half by the end of the decade.

tangent

California Gov. Gavin Newsom announced plans last month to reinstate a $7,500 state tax credit for electric vehicle buyers if Trump eliminates the federal tax credit. However, according to Bloomberg and the New York Times, the plan could be ignored. Musk responded to the Bloomberg report by calling the proposal “crazy” in a social media post.

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