According to statements by the Speaker of the U.S. House of Representatives, Mike Johnson, reported by Bloomberg, the $7,500 federal tax credit for purchasing an EV is very likely to disappear as early as the next budget resolution. "I think there's a greater chance it's eliminated than saved," he stated.
Growing budgetary and political pressure
This decision is part of a global trend: Germany and even China have already begun to reduce their incentives for electromobility. In the United States, the end of the credit would notably serve to finance the vast tax cut program of the Trump administration. The current president, who has already expressed his opposition to mandates favoring electric vehicles, has shown no interest in defending the incentive.
Bad news for manufacturers and consumers
The withdrawal of the tax credit would be in addition to the 25-percent tariffs on imported vehicles and would directly hit EVs like the Ford Mustang Mach-E, Chevrolet Equinox EV and Jeep Wagoneer S, all assembled in Mexico. Those models, already not very profitable for their manufacturers, could become financially unsustainable to sell without the tax assistance.
A perfect storm for the affordable EV market
Manufacturers are often bound by regulatory requirements to sell a certain number of EVs. Even if they lose money on each sale, they will have to continue offering them, at least in the short term. The elimination of the tax credit therefore risks increasing losses for Ford, General Motors, and Stellantis, while making electric vehicles significantly less competitive for buyers.
An outcome still uncertain
All is not yet lost. Elected officials representing states where electric vehicle factories are located could oppose it. The Senate, with a slim Republican majority, could also block the measure. But if it reaches the Oval Office, a presidential veto should not be expected.
The future of the EV tax credit seems increasingly compromised in Washington. For American consumers, the cost of electric vehicles could jump shortly.