Trump Chief Economic Adviser Larry Kudlow
As tax credits begin to expire for some automakers and the electric-car industry begins to lobby to extend them, the Trump administration plans to end them altogether.
President Donald Trump’s Chief Economic Adviser Larry Kudlow told Reuters that the administration plans to end the $7,500 federal tax credit by 2020 or 2021 for all automakers.
Last month, President Trump himself tweeted that he would end all electric car subsidies for plug-in cars sold by General Motors in retaliation for its announced layoffs and plant closures, which revealed in conjunction with news that it would end production of the Chevy Volt in 2019—the chief recipient of those subsidies to GM.
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GM’s subsidies were scheduled to wind down anyway starting in April, because the company crossed the threshold of selling 200,000 plug-in cars eligible for the credit this quarter.
When the credits were passed in 2009 as part of the Recovery Act from the Great Recession, Congress set them to sunset for each automaker after it sold its first 200,000 cars.
After an automaker reaches that milestone, its cars remain eligible for the full credit through the end of that quarter and for one more quarter thereafter. After that they can earn a half-credit for six more months, and a quarter-credit for another half year before they end entirely.
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Full credit eligibility for Teslas expires Dec. 31, three months before GM’s.
This is expected to put Tesla’s and Chevrolet’s electric cars—the Volt and the Bolt EV—at a disadvantage relative to other electric cars in the market.
In response, Tesla, GM, Nissan, and other electric-car advocates have begun lobbying to extend the credits to give them a fixed end-date after five years. Democrats have introduced a bill in the House to extend the credits as part of their Green New Deal.
Kudlow, in response to a question about the GM cutbacks, said, “As a matter of our policy, we want to end all of those subsidies. And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”