Trump budget would eliminate tax credit for electric vehicles

Trump's budget would cut $126 billion or 5 percent from non-defense federal government spending. Cuts would include doing away with the plug-in vehicle tax credit altogether, a credit that can give EV buyers up to $7,500 back on their federal tax bill.

Kudlow on eliminating the EV tax credit

Larry Kudlow, Trump's economic adviser said that ending the tax credit could save the government $2.5 billion over the course of a decade. Back in December Kudlow told reporters: “As a matter of our policy, we want to end all of those subsidies.” He said then that the Trump administration intended to end subsidies that had been introduced during the Obama administration.

Automakers have lobbied to have EV tax credits extended

A recent article notes: "Major automakers have been lobbying Congress to extend the credit that phases out after companies hit 200,000 vehicles sold. They are hopeful Congress could expand the benefit by including it in a package of extended tax provisions that would otherwise expire that could win approval this year."

The present credits start to decline after the sale of 200,000 eligible EVs. Both GM and Tesla have reached that level. Tesla had the amount of the credit reduced from $7,500 to $3,750 at the beginning of this year. GM reached the 200,000 level last October with its tax reduction being halved starting at the beginning of March this year. Automakers say extending the tax break for all makers would level the playing field.

The tax credits now are quite limited in their cost because they phase out after the 200,000 sale level but if the tax credits were extended back to all auto makers the government costs would soon become much higher especially as sales increase. If foreign makers also got the credit the cost would be even more. However, on the positive side it would encourage the trend to green energy vehicles that do not pollute through using fossil fuels. No doubt Trump would not countenance giving the credit to foreign auto makers.

Trump is eliminating other clean energy incentives

At present the Energy Department provides low interest loans to automakers to develop more efficient technology. Tesla, Ford, GM, and Chrysler-Fiat have all taken advantage of this program. It has helped them develop batteries, and hybrid systems, and improve car mileage. The Trump budget would eliminate these loans. However, for the last few years the loan program has not been active.

Under Trump, the Environmental Protection Agency has proposed eliminating any increase in fuel economy standards that new technologies have been designed to meet.

The Trump budget unlikely to pass the US Congress

A recent article notes: "Trump’s $4.7 trillion budget, which seeks to slash funding for foreign aid and the State Department and increase spending for the military and a border wall, is expected to be rejected by Congress."