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Posted on 05/06/2025 1:12:12 PM PDT by Red Badger
Republican House Speaker Mike Johnson confirmed that current discussions about the $7,500 federal tax credit for electric vehicles in the budget would “more likely than not” result in killing the EV incentive.
The US Congress is back from its April pause, and negotiations over the federal budget continue.
As part of the new budget, the Trump administration is pushing for further tax cuts that the new tariffs can’t compensate for. This will lead to an even bigger deficit, which Trump campaigned on fixing.
Elon Musk’s DOGE effort was supposed to cut $2 trillion in expenses, but the target has since been revised to $150 billion by 2026.
It’s now up to Congress to cut, and the federal tax credit has long been a target for Republicans, who now control the Senate, the House, and the White House.
Today, House Speaker Mike Johnson gave an update on the negotiations and said that they are more likely than not going to kill the EV tax credit (via Bloomberg):
“I think there is a better chance we kill it than save it. But we’ll see how it comes out.”
Most experts agree that Trump’s proposed tax cuts will increase the US deficit by at least $4.5 trillion over the next decade.
In 2024, the federal government is estimated to have spent about $2 billion in advance point-of-sale EV tax credit payments.
It’s less than a drop in the bucket.
Electrek’s Take
This is more about politics than about fiscal responsibility.
The tariffs amount to a giant tax increase on the entire US population, while Trump’s proposed tax cuts are structured to benefit the top 1% the most. The top 1% earners in the US are expected to get about 25% of the total benefits from the tax cuts, while the top 5% should get nearly half.
Meanwhile, the US has a growing debt problem, and these tax cuts would add to the deficit.
But not to worry. Cutting $2 billion a year in spending on electric vehicles, which helps the US not fall too far behind the rest of the world in the critical electrification of the auto industry, one of the last major manufacturing industries in the US, will help close the gap.
It would be funny if it weren’t such a serious issue.
That said, we knew it was coming since the elections. The main question is about timing. The budget is now expected to pass at some point between the end of May and the end of July.
If the EV tax credit is indeed removed, there should be a grace period. The GOP has already proposed a few pieces of legislation over the last year, and some included provisions to retain access to the credit until the end of the year, while others would end it by the end of the following month after the legislation passes.
The latter would certainly be problematic, but it would boost EV sales in the US as buyers would try to take advantage of the credit before it goes away.
As the biggest EV automaker in the US, Tesla would likely be the most affected by the end of the tax credit.
In the short term, companies like Rivian and Lucid wouldn’t hurt too much, as most EVs in their lineups are too expensive to have access to the tax credit, but it would hurt the prospects for their upcoming cheaper electric vehicles, like Rivian’s R2 launching next year.
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Those of us who did not buy EVs should receive the tax credit!
Why can’t you get a tax credit if your vehicle has over 500HP? You are paying more gas taxes already.
Of course, a company with a name like “Elektrek” is an impartial, unbiased reporter on this issue. 😉
“...[the tax break] helps the US not fall too far behind the rest of the world in the critical electrification of the auto industry...”
Hmmm... I missed their well-supported argument as to why it’s critical that our auto industry be electrified...
Tired of these articles that predict large costs for Trump policies tariffs etc. They are propaganda.
There never should have been solar or EV grants, tax credits, mandates etc. The solar companies went bankrupt after the entrepreneurs & slush recipients got rich. The G’vt shouldn’t be picking winners & losers. Let the market decide.
Yeah, ‘plans’.
TESLA NEVER GOT A $7,500 tax credit.
THAT Amount only went to UNION auto makers.
TESLA cars got $5,000 only
TESLA IS NOT UNION :) :)
I 100% agree. Further still, the EV tax credit and solar tax credit just artificially inflate the prices that consumers pay up front -- for you to get that back from the govt when you file your taxes in April. So the tax credits don't help the people that the tax credits supposedly are for. They help only the special interests. I saw this first hand when I added onto my solar in year 2022 -- the year the Inflation Raising Act altered the solar tax credit and EV tax credit.
“but the target has since been revised to $150 billion by 2026.”
DOGE site already reports $160 Billion in savings, and its only 3 months into President Trump's term. Another nearly 4 years to go.
For a while, every time I would see an EV, I would point out to everyone in my car that all of us paid for some of the EV. I guess I went overboard. Some asked me to stop pointing it out. Not because they disagreed with me, they were just disgusted.
Not correct. Tesla buyers who met income qualifications got 7500.0
Good, I have two EVs both Tesla and no I never got the credit or the payout my income and the wife’s claimed income vastly exceeds the cap for it. The Gov has no business subsidising big auto. If people have a use case for an EV they will buy it based on that case.
Now fix the federal and state road fund by eliminating gas tax and taxing by the mile from mile one. Use more pay more it’s that simple.
The avg person pays less than $110 in federal gasoline tax per year that doesn’t cover a single FOOT of new road nor maintenance on a existing road. At the state level California with the highest state gas tax would average $451 per year again not a single foot of infrastructure costs.
14,500 miles per year at 25mpg times 77.9 cents per gallon Cali tax = 451. Every other state is less. Fed tax is 18.4 cents= $106
These subsidies are a Jimmy Carter EO that keeps being renewed and growing.
Good Observation.Fred Lambert, writer and editor of Elekrek is a virulence Musk hating leftist. This publication is the PMSNBC of EV media. To come to think of it, despite being the only person West of China to mass produce EVs, Musk is hated by almost all the pro EV, pro Environmental press. What a shock! Pun intended
Ending a “tax cut for the rich” ...
Didn’t EV prices go up when the credit was started? Ev prices should go down after credit goes away
The market for EV automobiles in the United States is either near or at the saturation point, in the absence of a mandate requiring their purchase after a date certain, as a replacement for ICE vehicles.
EV automobiles are, and have always been, niche vehicles. The battery array necessary to provide more than limited range has always been the obstacle. Bypass that limitation, by either some form of on-board electrical generation system to provide power on demand, or produce a “Mr. Fusion” generator as was on the “Back to the Future” DeLorean. Hydrogen fueling has its own set of limitations, which may or may not be overcome, but there is more promise there than with battery power storage systems.
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