- The $7,500 federal EV tax credit will likely die in the next budget resolution, House Speaker Mike Johnson told Bloomberg.
- That'll make EVs more expensive at a time when tariffs are already increasing pricing pressure.
- The Trump administration campaigned on ending EV incentives, so don't expect the president to stand in the way.
Despite opposition from proponents who argue that clean vehicle incentives create domestic jobs and reduce emissions, Congress is likely to kill the EV tax credit soon, Bloomberg reported today.
“I think there is a better chance we kill it than save it,” House Speaker Mike Johnson, R-La., said in the interview with Bloomberg. “But we’ll see how it comes out.”
This follows similar developments in markets like Germany and even China, which have massively tapered incentives in recent years. However, in the U.S., the move to cut the tax credits—in part to help fund President Donald Trump's massive tax cut package—would come at a time when EV sales continue to grow.
It also comes at a time when the affordable EV market is facing a parallel challenge to affordable EVs: tariffs. Firms like Ford, General Motors and Stellantis often outsource production of their least profitable models to pad margins. That means the Jeep Wagoneer S, Chevy Blazer EV, Chevy Equinox EV and Ford Mustang Mach-E are all built in Mexico. With a 25% tariff on all imported vehicles and no tax credit to count on, those cars are about to become major drags on their parent companies.
Regulatory requirements often mean they must sell a certain number of EVs, and that means that, in the near term, they will continue selling their Mexican-built EVs. Now they will just have to do so at a bigger loss.
Of course, the "more likely than not" angle leaves some wiggle room. Perhaps representatives from states with EV factories—and there are many of them—will rebel. Perhaps in the Senate, where the Republicans have a slim majority, it would be defeated. If it makes it to the president's desk, though, he certainly won't veto it. He has been clear that he also opposes the EV "mandate" and doesn't want to pay for it.
If the incentive does get cut, expect a huge disruption in the EV market. In the meantime, if you want an affordable EV, I'd recommend you buy one before these changes are made.
