President Trump’s One Big Beautiful Bill ends $7,500 tax credits for new electric vehicle purchases on September 30, along with $4,000 for used models, seven years earlier than planned by the Biden administration.
Electric vehicle battery production tax credits (PTCs) will end in 2028, four years early, while tighter emissions regulations have been scrapped. However, a $250 road repair charge included in the original bill was dropped by the Senate.
This followed Trump’s January decision to revoke the Biden administration’s mandate for electric vehicles to comprise at least 50% of all new vehicle sales by 2030. The federal government also instructed state officials to halt charging infrastructure expenditure via the $5 billion National Electric Vehicle Infrastructure (NEVI) program.
On June 12, Trump also blocked California’s electric vehicle sales mandates following lobbying by some automotive manufacturers, including GM and Toyota. The mandates banned the sale of new internal combustion engine (ICE)-only vehicles from 2035 and required that at least 80% of all new vehicle sales be battery electric by then.
California Governor Gavin Newsom has said he will legally challenge Trump’s repeals. Eleven other states had based their own plans to incentivize electric vehicle adoption on California's policies.
Other legal challenges to Trump administration efforts to cut electric vehicle incentives have already had an effect. On June 24, a federal judge issued a preliminary injunction ordering the release of NEVI funding for 14 states led by Democratic governors, although the long-term fate of that financing remains uncertain due to ongoing legal wrangling.
NEVI has accelerated the buildout of electric vehicle charging infrastructure, “particularly by enabling greater density along highway corridors,” said Robert Barrosa, the CEO of Electrify America, which runs a network of around 1,000 electric vehicle charging stations in the United States.
Short-term pain
Thanks in large part to federal and state subsidies, the electric vehicle market, which consists of battery electric and plug-in hybrid electric vehicles, has seen rapid growth in recent years.
Electric vehicle market share increased from 2% of new light-duty vehicle sales in 2020 to 10% in 2024, and the number of models in the U.S. grew from under 20 in 2012 to nearly 130 in 2024, according to data from the International Council on Clean Transportation (ICCT).
But Trump’s anti-electric vehicle drive will likely slow down the market. After the passing of the One Big Beautiful Bill and introduction of new import tariffs, Rystad forecast that sales of new electric vehicles will account for just 18.75% of the market by 2030, whereas in January it forecast a 24% market share.
Source : Reuters