White House Economic Adviser Larry Kudlow said Monday the Trump administration wants to end subsidies for purchases of electric vehicles.
Kudlow told reporters that electric car subsidies “will all end in the near future,” projecting 2020 or 2021 for an end date.
“We want to end, we will end those subsidies and others of the Obama administration,” Kudlow said.
The comment came after President Trump said last week he would seek to cut General Motors’ federal subsidies, including for electric cars, over the automaker’s move to shutter U.S. plants so it can focus on the development of alternative vehicles.
The threats from the Trump administration have slowed momentum for a bipartisan push in Congress to reform the electric vehicle tax credit, and emboldened critics of it.
Critics, such as oil and gas billionaires Charles and David Koch, want Congress to repeal the tax credit, and not expand it, as part of a package of temporary tax breaks slated for re-upping this year known as “extenders.”
However, the electric vehicle credit does not have an expiration date, and a new extenders package introduced by House Republican tax writers last week did not feature a provision to repeal the subsidy.
The electric vehicle industry, led by Tesla and GM, is calling for Congress to reform the $7,500-per-vehicle tax credit for electric and plug-in hybrid vehicles, primarily by lifting the individual manufacturer cap, and allowing the credit to be used into future years.
The credit, first introduced in 2009, is capped at 200,000 vehicles sold per automaker.
GM is close to using up its availability of the tax credit. Tesla has already reached the limit, the only automaker to do so, which under the law will result in the tax credit for buyers of its cars being reduced by half for six months and then cut to $1,875 for another six months until it ends.
The effort to expand the credit has bipartisan support. Republican Sen. Dean Heller of Nevada, whose state houses Tesla’s battery manufacturing, recently introduced a bill to remove the limit on manufacturers, but phase out the credit in 2022.
Rep. Paul Tonko, D-N.Y., on Friday called for his colleagues to extend or expand the federal electric vehicle tax credit, saying that improving the subsidy would be the “biggest driver” of more electric vehicle adoption.
Only Congress has the power to alter the electric vehicle tax credit, and Trump could not on his own limit GM’s ability to use the subsidy, experts say.
