Republican account To terminate EV -tax credit, GM and Ford can damage

The sale of electric vehicles has risen in recent years, partly due to a tax credit of $ 7,500 from the federal government, which helps to reduce the costs of buying one.

But one Budget Bill that house republicans released on Monday Would put an end to that tax credit. Their proposal would also draw up new restrictions from other tax benefits that car manufacturers have encouraged to invest dozens of billions of dollars in new battery factories in the United States.

By next year, the bill would take the $ 7,500 tax credit for buyers of new electric vehicles and a credit of $ 4,000 that can be applied to the purchase of used electric cars and trucks.

If signed in the law, the change will probably increase the sale of electric vehicles in the coming months, because consumers will race to take advantage of the tax credit before it leaves. But the sale will probably delay or fall as soon as the credits end, analysts said.

“It will definitely influence adoption and slow down considerably,” says Stephanie Valdez Streaty, director of the industry insights at Cox Automotive, a research agency.

COX expects electric vehicles to be 10 percent of all new vehicle purchases this year. If the congress does not make any changes to the tax credits, that number should rise to almost a third by 2030, the company estimates.

But if the congress withdraws the credits, Mrs. Valdez Streaty said, she expects that the sale of electric vehicles will yield 20 to 24 percent of the new car sales by 2030.

Losing the credits would handle a new financial blow for car manufacturers that are confronted with higher costs because of President Trump’s 25 percent rates on imported cars and car parts.

The Republican tax proposal would harm many car manufacturers who race to introduce new models. General Motors and Ford Motor can be struck particularly hard. Both have invested heavily in factories and supply chains in the hope of ultimately producing millions of electric vehicles per year.

GM has opened two battery plants, in Ohio and in Tennessee. The company built them through a joint venture with LG Energy Solution. Ford has three battery factories under construction -a complete factory in Michigan and two in collaboration with a South Korean company, SK ON, in Kentucky and in Tennessee.

Both Detroit -car manufacturers have also invested in mining activities to protect domestic deliveries of lithium, an important material for batteries.

Tesla, the largest seller of electric vehicles in the United States, will also be injured. The turnover of the company has slipped in recent months because it has not introduced new, more affordable models and because of a recoil from consumers to his Chief Executive, Elon Musk, who played a prominent role in the Trump government.

But Tesla has some advantages. While most car manufacturers still lose money in electric cars, Tesla has earned money for a year. As a result, it can have more financial leeway to lower the prices to support the demand if the credits end. The company also relies less on imported parts than other American car manufacturers.

Other large car manufacturers race to catch up in electric vehicles, also by building many new factories, usually in states that have chosen many Republican legislators.

Toyota has built a battery plant in North Carolina. Hyundai started making electric vehicles in a factory in Georgia and plans to produce batteries there. Stellantis and a partner have two battery power stations under construction in Indiana. The states that organize these factories count on them to create thousands of well -paid jobs.

If the tax rules change considerably, car manufacturers can delete, scale or delay their plans.

“If the government wants the US to compete with China and the rest of the world in the inevitably large EV market, and wants GM and Ford to do large, long-term investments in EV development and the American production, it must expand the tax credit and deregister doctrinaire whiplash,” said Erik Gordonie.

China is the world’s largest producer of electric vehicles and is the most important source of critical materials for batteries and electric motors, such as processed lithium and rare earth minerals. The elimination of tax credits would make it much more difficult for the American car industry to catch up.

“What this does to the American car industry and its ability to compete worldwide – I think it will hurt us,” said Mrs. Valdez Straty. “I think it will delay us and we are already behind China.”

Ford and Stellantis refused to comment, just like the Alliance for Automotive Innovation, a policy group.

The federal government began to offer $ 7,500 credit under President Barack Obama, and it remained in place during President Trump’s first term. The credit was renewed and expanded in the Inflative Education Act that President Joseph R. Biden Jr. signed in the law.

Because electric vehicles are more expensive than vehicles for internal combustion, the credits have been essential to bring more people to buy them.

The credit is available on vehicles for sports aid programs and pick -ups that sell for $ 80,000 or less and sedans that do not cost more than $ 55,000. Cars must be assembled in North America and their batteries must meet the requirements that make their battery materials from. To be eligible, individual buyers do not have to earn more than $ 150,000 a year and do not mate more than $ 300,000.

Many of those conditions do not apply to rented vehicles. But the tax credit on those cars and trucks goes to the company that leases the car to private individuals, which is usually the financial poor of car manufacturers. Many lease companies have passed on the savings to their customers, a practice that has led to a strong increase in leasing electric vehicles.

About 595,000 electric vehicles were rented in 2024, said Mrs. Valdez Streaty, against around 96,000 in 2022 before the leasing stimulans was available.