by Republicans want to abolish tax incentives for electric vehicles
Republicans in the U.S. House of Representatives propose eliminating federal tax credits for buyers of new and used electric vehicles. If this initiative is adopted, new buyers will lose the opportunity to receive $7,500, while those purchasing used cars will lose $4,000. This could further strengthen Tesla’s position in the American market.
Currently, Tesla holds about 50% of the U.S. electric vehicle market, despite growing competition. The abolition of tax incentives could harm traditional automakers such as Ford and GM, which have not yet achieved profitability in electric car production. Meanwhile, Tesla, which has long been profitable, will be able to adapt more easily to the changes.
How do the current incentives work?
Currently, buyers of new electric vehicles can receive up to $7,500, while used vehicles qualify for up to $4,000. The credits are available for vehicles that meet certain requirements: assembled in North America, have a limited price (up to $80,000 for SUVs and pickups, up to $55,000 for passenger cars), and use batteries from specific sources. There are also income limits: for individuals—up to $150,000, and for married couples—up to $300,000.
If the credits are abolished, the share of electric vehicles in sales by 2030 could drop from 30% to 20%.
Consequences for automakers
The abolition of incentives could severely impact manufacturers that are still developing their EV segments. For example, Rivian and Lucid, which have not yet reached profitability, may face serious financial pressure. Even players like Toyota, Hyundai, and Kia could encounter difficulties, as their business models rely on government support.
Experts believe this could slow down the U.S. transition to electric vehicles and weaken the position of American companies in competing with Chinese manufacturers. Currently, China is significantly ahead of the U.S. in the development of the electric vehicle industry.
Although Tesla will also feel the impact of the credit abolition, its financial stability will allow the company to maintain its leadership. Other manufacturers, however, may face the need to radically revise their strategies, which could lead to the closure of certain projects or even brands.
