On Thursday, November 14, a source told Reuters that Donald Trump's transition team plans to scrap the $7,500 tax credit available to consumers when purchasing electric vehicles.
Insiders reveal that as the world's largest electric vehicle manufacturer, Tesla has informed Trump's transition team of its support for the cancellation of subsidies. Musk earlier this year noted that the withdrawal of subsidies may slightly impact Tesla's sales, but it would deal a devastating blow to competitors, including traditional automakers like General Motors.
Notably, this subsidy is one of the key measures in President Biden's Inflation Reduction Act (IRA), aimed at encouraging consumers to purchase electric vehicles and promote the development of clean energy.
Trump hopes to save funds by eliminating electric vehicle tax subsidies, using the money to pay for the upcoming trillions in tax cuts.
The Trump administration's plan has sparked a strong market reaction: electric vehicle stocks have plummeted, with Tesla falling by 5.77%, and other EV manufacturers like Nikola and Rivian seeing declines exceeding 10%. This indicates the market's concern over the policy change, fearing the cancellation of subsidies will slow the adoption and development of the electric vehicle industry.
Trump promised before the election to push for increased U.S. oil production, even as it had reached an all-time high, and to repeal President Biden's costly clean energy initiatives. These policies encompassed electric vehicle tax subsidies, as well as subsidies for wind and solar energy, and support for large-scale hydrogen production.
The potential cancellation of electric vehicle subsidies by Trump could pose a negative impact on Japanese and South Korean battery companies that have extensively supplied the US new energy vehicle market, making it challenging for companies like LG Energy Solution, SK On, Samsung SDI, and Panasonic Battery.
Today (November 15), LG Energy Solution hits its largest single-day decline: Shares plummet 12.09%, possibly related.
Due to the various trade protectionist measures implemented by the country, China's electric vehicle and battery manufacturers have effectively been shut out of the US market. Batteries made in China are not eligible for the consumer electric vehicle subsidies introduced by Biden. Therefore, Trump's cancellation of electric vehicle subsidies has had a minimal impact on China's lithium battery industry.
