Among the many ways President-elect Donald Trump promises to change government is a repeal of the $7,500 tax credit for buyers of U.S.-made electric vehicles. He has also expressed a desire to roll back the Biden administration’s incentives for automakers to build EVs and battery plants in the U.S.
But far from cheering the news, some automakers have pleaded with the incoming administration to keep the incentives.
Micheline Maynard wrote about automakers’ pleas for the Boston Globe. She says companies want to protect the investments they’ve already made in building and selling electric cars. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: Automakers haven’t exactly embraced an all-EV future, I think it’s safe to say – though, some have moved a bit further than others. How does this compare with their initial reaction to the Biden administration’s incentives? And some state governments also were trying to urge carmakers to go EV.
Micheline Maynard: Exactly. So this $7,500 incentive that is being proposed to repeal… That doesn’t apply to every single EV sold in the United States. In fact, there are a few Teslas that don’t qualify for this incentive.
But it really has helped spur sales and it is a reason for some consumers to either buy or lease electric vehicles. And so that’s one of the things that dealers can do to get people in the door. They can say, “well, you’re going to get an incentive on top of this.” And it was always thought that the car companies saw that as kind of a bridge to the point where it wouldn’t be needed to put enough people into EVs.
So is it still a bridge? I mean, basically, are car companies saying we need these incentives because they’re still not profitable? I know that for a long time, looking at Ford – the Mach-E and the Lightning – they were taking a big per-unit hit just on manufacturing.
So there’s two things going on. There’s many, many billions of dollars that have been spent on developing new EVs, investing in battery plants. Those battery plants are something like 50,000 potential jobs and $100 billion in investment across the country.
California is going to impose a standard soon where more than a third of your vehicles sold in California have to be zero emissions. And 17 states have gone along with California.
So you’re going to have to sell some EVs. You really kind of need that incentive to get people into the EVs. And then you’ve spent all this money, and that’s why the car companies are saying, “please keep these standards in place.”
And so they can meet those CAFE standards?
So in this case, zero emissions. CAFE, the Corporate Average Fuel Economy standard, would be for cars that run on gasoline. But in this case, these are what are called zero emissions, and that’s what we’re talking about here.
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So these manufacturers want to be able to meet those zero emission standards and they think that by keeping these incentives in place, they can keep demand higher than they would be without them.
Right. And I think one thing to remember is that the 17 states, led by California, represent about 40 percent of the car market. So the automakers can keep building cars that run on gasoline. They call them “internal combustion engines.” But they still face the prospect that 40 percent of the cars that they sell have to be EVs.
And so basically they’re saying, “look, we spent all this money, we’ve gotten incentives from the federal government, from state governments, from some local governments in some cases. We’ve sent contracts out to our suppliers. We’ve told our dealers and our customers that these vehicles are coming. So we can’t just drop this now because we’re going to be in a mess of trouble if we do that.”
Let me ask you about how China might factor in on all of this, because they, of course, make and sell a lot of EVs in other parts of the world. A lot of those cars don’t meet [Department of Transportation] DOT standards or whatever, and they’re not allowed into the U.S.
Now you’re seeing this huge rise in China’s automotive sector. The Trump administration has promised increased tariffs on Chinese goods. I’m wondering how this all calculates into what U.S. car companies are saying about EVs and the policies thereof.
I think the feeling is that the U.S. will only keep Chinese vehicles out for so long.
I want to give you an example. There’s a company called Build Your Dream, or BYD. It is now the largest seller of electric vehicles in the world, even though it doesn’t sell a single one in the United States. It’s also now the largest manufacturer in China.
BYD wants to get a plant in Mexico. And of course, they’re saying, “no, we’ll supply the Mexican market from there.” But the idea is that some day, BYD expects to sell in the United States, and it’s going to use that Mexican plant as a launching pad.
They’re not waiting for us. They’re selling vehicles in Europe. They’re selling vehicles in South America. They’re just kind of building, building, building, until the door is open to come into the United States. And I think the American companies and some of the Japanese and Korean companies, and the Germans would like to forestall this as long as possible. But I think they know that eventually the Chinese will be here.
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I’m thinking about one of the largest EV manufacturers in the world who just so happens to be from Texas these days and have the president-elect’s ear. Where is he when it comes to the government’s role in incentivizing EV production?
So we’re talking about Elon Musk. He does not seem to be fighting very hard to keep the $7,500 of tax credit. And one of the reasons is that, as I was saying, all these vehicles don’t qualify for it. But he has a sense, apparently, that they have enough of a foothold in the United States to lead the EV market. They have about half the market.
Well, I don’t think I agree with that, because EV buyers are people that are willing to take a risk on technology. These are not people that necessarily are going to wait for a General Motors or a Ford or Toyota EV, they’ll go get something from Rivian, they’ll go get something from Lucid. They’re willing to be kind of adventuresome. And I think that they really want that $7,500 credit, and eliminating it would be a way to sort of thin them off.
Where do you think this is headed? Has the president-elect or anyone in his administration responded to U.S. automakers concerns?
Well, it depends. You kind of have to look at what kind of clout the automakers will have with this administration. How much money have they donated to the inauguration and to the Trump campaign and things like that?
The tech sector has donated a ton of money. It’s kind of weighing industries against each other. I would not be surprised if the $7,500 credit goes away and we see an outcry and eventually it comes back.
