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2020 Trump budget would pull plug on electric vehicle tax credit

2018 Nissan Leaf charge port 22.JPG
2018 Nissan Leaf charge port (Sinclair Broadcast Group / Jill Ciminillo)

In his budget aimed at cutting $126 billion or 5 percent from non-defense federal spending, President Trump proposes to eliminate the plug-in vehicle tax credit that gives electric-car buyers up to $7,500 back on their federal taxes.

Trump economic adviser Larry Kudlow says he expects ending the tax credit to save the government $2.5 billion over a decade.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow had said to reporters in December, as quoted by Reuters.


MUST READ: Senate tax plan leaves electric-car purchase credit in place

Kudlow also said then that the Administration planned to end subsidies that were imposed during the Obama administration.

Automakers have been lobbying the administration to extend the credits, so as to level the playing field among automakers. Tesla and GM reached 200,000 deliveries of eligible vehicles, triggering the graduated wind-down of their credit amounts.

Tesla has cut prices three times (and announced once that it will raise them), since the amount of the tax credits was reduced on its cars from $7,500 to $3,750 on Jan. 1.

READ THIS: Tesla, GM, Nissan band together to extend electric-car tax credits

General Motors also reached the cap of 200,000 plug-in sales last October, and its credits will drop by the same amount March 1.


Trump has repeatedly attacked the electric-car tax credit. In his proposed tax reform in 2017, Trump initially eliminated the credit, though Congress restored it at the last minute before it was passed. After General Motors announced the closing of five factories, Trump also threatened to eliminate all subsidies for GM cars, including the tax credits.

Since the tax credits are limited individually for the customers of each automaker, the cost of the credit to the government initially was limited. But with more and more companies developing electric-cars for sale and more electric-car hopefuls from China and Europe aiming to sell cars in the U.S., the total estimated cost is going up.

READ MORE: Trump vows retaliation against GM for layoffs

The latest Trump budget also proposed to eliminate loans from the Energy Department that helped automakers develop more efficient vehicle technology, which Ford, GM, Chrysler, Tesla, and others used to develop technology, such as batteries and hybrid systems, to improve gas mileage from their cars.

Under President Trump, the EPA has proposed to eliminate increases in fuel economy standards that those technologies were designed to meet.

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