Boyden Gray PLLC partner Michael Buschbacher discusses concerns of an electric vehicle mandate on The Bottom Line.
President-elect Trump is expected to unravel many of the green initiatives pushed through by President Biden when he returns to the White House, including rules aimed at incentivizing the production and purchase of electric vehicles (EVs).
On the purchase side, the Trump transition team is reportedly already looking to get rid of the $7,500 tax credit for the purchase or lease of certain EV and plug-in hybrid models that was passed as part of Biden’s signature Inflation Reduction Act of 2022.
President Biden drives the electric Ford F-150 Lightning at the Ford Dearborn Development Center in Dearborn, Michigan on May 18, 2021. (Nicholas Kamm / Getty Images)
Ditching the federal subsidy is seen as having the greatest potential impact on consumers who want to purchase an EV or might consider buying one.
“The EV tax credit was intended to make electric vehicles more affordable for the average consumer and they have,” said Scott Kunes, COO for Kunes Auto & RV Group. “We’ve seen EV sales and leases increase significantly as a direct result of the federal tax incentives. Their repeal would once again put those vehicles out of reach for the average consumer.”
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Shawn McLaughlin, CEO of Emporia Energy, told FOX Business that industry research shows that the majority of current EV owners were motivated to make the switch because it was their way of doing their part to help the environment.
A driver plugs in a Tesla electric vehicle to charge at a Tesla Supercharger location in Santa Monica, California on May 15, 2024. (Photo by PATRICK T. FALLON/AFP via Getty Images / Getty Images)
He argues that to continue EV adoption growth, the auto industry needs to attract new buyers that are more price sensitive.
“A rollback in government support and incentives for EV adoption will slow the growth of EV sales over the next couple of years by making the current offering of EVs less price competitive,” McLaughlin said.
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Still, even if the tax credit is scrapped, the market will adjust to meet the needs of EV customers.
“With improvements in battery technology and manufacturing the unsubsidized cost of EVs will reach cost parity of ICE vehicles in 2026-2027, which will start attracting the more cost sensitive buyers regardless of the federal EV tax credit,” McLaughlin added.
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Kreg Peeler, the founder and CEO of EVject, a breakaway EV charging connector, agrees – but predicts a massive shift is coming to the auto industry that will make the discussion over EV tax credits moot.
“Over the next 10 years, it won’t matter what consumers think of EVs,” Peeler told FOX Business. “It is AVs (autonomous vehicles) that win.”
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“As full autonomy rolls out, car buyers will no longer be the drivers. Fleets will become mainstream,” he predicts. “The majority of travelers will pay for their rides per mile or minute and will not purchase a vehicle of their own.”
