Reuters first reported on 17 December 2024 that the transition team of incoming president Donald Trump has put forward a recommendation to cut off support for electric vehicles and charging stations in the country on top of measures aimed at blocking vehicles, components, and battery materials from China. This is a significant departure from the approach of the Biden administration that seeks to strike a balance between fast-tracking domestic EV adoption and improving the domestic supply chain for domestic EV production.
Promotion of EV Under Biden Admin
The Biden administration has implemented a comprehensive strategy to promote and fast-track electric vehicle adoption in the United States. This revolved around infrastructure development, financial incentives, and regulatory measures.
One initiative was the expansion of the charging infrastructure through the National EV Charging Network. Publicly available charging stations have doubled since Biden took office in 2021. An additional USD 521 million grant was awarded to expand the network further.
The admin also launched the EV Acceleration Challenge in 2023 to secure commitments from private companies to support the transition to electric vehicles and enhance further the availability of charging stations and related infrastructure.
Another initiative centered on financial incentives. The Inflation Reduction Act of 2022 includes tax credits ranging from USD 3500 to USD 7500 for qualified EV purchases. Around 150000 EVs were sold by June 2024 and consumers saved about USD 1 billion from the tax credits.
Nearly USD 2 billion has been awarded to support workers and convert existing manufacturing facilities for EV production. Loans were extended to initiatives like the Ford and SK On joint venture to finance new battery manufacturing plants.
The U.S. Environmental Protection Agency also finalized stricter pollution standards in March 2024. This covered passenger cars, light-duty trucks, and medium-duty vehicles based on internal combustion engines for model years 2027 through 2032 and beyond.
Reasons for Cutting Off Support for EV
The efforts of the Biden admin might be reversed under the incoming Trump administration. The president-elect vowed to ease regulations on vehicles running on fossil fuels and roll back the Biden admin EV mandate during his campaign.
His transition team has recommended ending the USD 7500 consumer tax credit for eligible EV purchases. Take note that this is part of the proposed broader tax-reform legislation and agenda aimed at reducing government spending on EV initiatives.
There is also a plan to impose tariffs on global battery materials to reduce reliance on foreign sources. The goal is to bolster domestic production of batteries and address national security issues arising from global supply chain reliance.
A plan to revert emissions and fuel economy standards back to 2019 levels was also proposed. The incoming Trump administration also wants to prevent states like California from setting and enforcing their own stricter vehicle emissions standards.
The aforementioned policy shifts reflect the earlier position of Trump against what he deems as biased government support toward electric vehicles. His team underscored favoring market-driven solutions and emphasizing energy independence.
It is also argued further that reallocating funds from EV to defense-related purposes will better serve national interests. Critics have warned that these policy shifts could hinder the growth of the EV market and affect the competitiveness of domestic automakers.