Terri Dee, producer/reporter, Indiana News Service, a bureau of Public News Service.
Supporters of electric vehicle ownership say there are several advantages to owning one.
Studies show EVs can convert 85% to 90% of their energy into forward movement. Most of the electricity used in an EV vehicle is American-made, and an EV can be charged at home, just like a cellphone.
Despite the benefits and their popularity, Rep. Mike Johnson, R-La., the Speaker of the House, has proposed removing a $7,500 tax credit for EV owners as part of President Donald Trump’s goal to restructure the country’s budget.
Battle over EV tax credit
John Higham, board member of the Electric Vehicle Association, wonders if it would cause potential EV car buyers to back away.
“Do I think if this $7,500 tax credit suddenly disappeared, it’s not going to kill the electric vehicle?” Higham asked. “It might slow the acceleration of the adoption of the electric vehicle, but it’s certainly not going to reverse the trend.”
Trump’s budget proposal could pass between the end of May and the end of July. Higham acknowledged the tax credit is a strong motivator for people to buy or lease an electric car. And he expects a 10% to 12% growth rate for purchases. Higham admitted the number could drop to between 8% and 9% if the tax credit disappears.
As of December 2023, Department of Energy data shows California motorists own more than a million electric vehicles, the most of any state.
The Republican controlled House has proposed legislation to extend the tax credit until the end of 2025. Analysts say the largest EV automaker, Tesla, owned by Trump associate Elon Musk, would be affected the most if the tax credit ends. Higham noted the fallout of repealing the tax credit could break down along party lines.
Repealing EV tax credit could hurt the economy
“That economic engine that is in those red districts, where there’s new battery manufacturing put in, new automotive manufacturing put in,” Higham pointed out. “Those are the voters that are going to feel it the most, are in those red districts. And so there are Republican congressmen who are saying, not quite so fast. It is harder to repeal than I think most people realize.”
In 2024, it is estimated the federal government spent about $2 billion in advance point-of-sale EV tax credit payments. Buzz about the tax removal may push consumers to buy EVs sooner than later, to take advantage of the credit before it disappears.
