White House Wants to End EV Subsidies ASAP

Matt Posky
by Matt Posky
white house wants to end ev subsidies asap

White House economic adviser Larry Kudlow announced Monday that the Trump administration is seeking an end to federal subsidies on electric cars. Interestingly, the move appears to be related to General Motors’ plant closings and layoffs. The company’s restructuring plan hasn’t gone over well with policy makers or the American public, with many accusing the automaker of abusing years of tax breaks, only to reduce its workforce as a way of pursuing new technologies, businesses, and further bolstering its profit margins.

However, cutting GM out of the electric vehicle subsidies deal is more likely to impact its rivals than anything else. The company said it’s on the cusp of the EV tax credit ceiling already, with the gradual phase-out of those incentives likely to take place through 2019. Yet Kudlow pointed to the elimination of the credits as one way of punishing GM for eliminating so many jobs, echoing President Donald Trump’s threats from last last week.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow explained. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

When asked for a target date, the economic adviser gave his best guess, saying “It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”

According to Reuters, Tesla and GM lobbied Congress for months to lift the cap on electric vehicles or make other changes that would make it easier to move EVs, including new incentives. That’s unlikely to happen until Democrats move in, at which point Congress will be far less inclined to support the Trump administration’s plan to abolish the EV tax credits entirely.

From Reuters:

In October, Senator Dean Heller proposed lifting the current cap on electric vehicles eligible for tax credits but phase out the credit for the entire industry in 2022. Two other senators in September proposed lifting the per manufacturer credit and extending the benefit for 10 years.

Also in October, Senator John Barrasso a Republican who chairs the Senate Environment and Public Works Committee, proposed legislation to end the EV tax credit entirely.

Analysts previously suggested that incentivizing electric vehicles to such a great extent may end up creating artificial demand. While that’s likely the point, some are concerned with what might happen when those credits are suddenly stripped away. Automakers are investing vast sums of their own money into developing these vehicles; it would be a huge blow to the industry if the rug was pulled out from under them. However, you could also make the argument that the credits already placed the auto sector on unstable ground.

While Kudlow still seemed mostly steamed with General Motors, he is also aware of the broader impact EV incentives have on the industry. He made clear any changes in subsidies would not just affect GM, knowing the government couldn’t simply target one automaker. “I think legally you just can’t,” he said.

[Image: General Motors]

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  • Vagvoba Vagvoba on Dec 05, 2018

    Never understood why taxpayers are subsidizing Tesla luxury car sales. I believe that some of the EV subsidies are a worthy investment in our environment, but I don't want more giveaways to those who can afford $80K+ cars. If anything, it makes sense to subsidize cheap electric cars, like the Bolt and the Leaf, or larger EVs that may potentially become volume sellers.

  • 0Gravity 0Gravity on Dec 05, 2018

    Not sure about the EV credits, but I'm an analyst that covers renewables so I can say with confidence that Kudlow's comment about ending subsidies for renewable energy is at best ill-informed or a deliberate lie. It's not something that can be done through executive or administrative action; it would require action by Congress and Congress even under previous full Republican control has shown no interest in re-negotiating the long term phase out subsidies revised in 2016 compromise agreement. The subsidies for wind and solar are slowly being phased out already and reducing each year in allowed value. This admin won't be able to prematurely alter the current law's structure. Watch what this administration does, not what it says. Bunch of blowhards and liars

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  • YellowDuck Wait...how do you make a mid-engine crossover? Or even a 4-door coupe? Me not get.
  • 28-Cars-Later Thanks Corey. The head stud job on NOrthSTAR-T was $3K *years ago* as it involves an engine pull so rear wheel arch rust in and of itself isn't a show stopper. I'll be sure to check out the trunk as it may start to add up on deferred maintenance. Supposedly this was garaged so the underneath the rockers etc. should be decent but if those are shot its not gonna work.
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