White House Will Seek Ending Electric Car Subsidies, Says Top Adviser

The phase-out could happen sometime between 2021 and 2022.

via Getty Images

The White House will seek to remove subsidies on electric cars, revealed one of the Trump administration's top economic advisors, Larry Kudlow, on Monday. According to Reuters, Kudlow is directing loose blame towards General Motors, citing its latest round of plant closures as an influence for the decision.

In order to promote the growth and development of EVs, consumers who buy a new electric car are entitled to a $7,500 tax credit under Federal law adopted in 2009. Kudlow was specifically questioned about this consumer-facing tax credit for electric vehicles (EVs), which he replied with an indication that the White House would seek to end these credits.

“As a matter of our policy, we want to end all of those subsidies,” said Kudlow, “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth.”

Kudlow's statement directly coincides with Tweets ushered by President Trump shortly after GM announced its plant restructuring.

By law, consumers can only claim these credits on the first 200,000 EVs delivered by an automaker. Once this threshold has been met, the credits begin a phase-out process over the following twelve months, having once to $3,750, and again to $1,875 before finally diminishing altogether. Currently, domestic automaker Tesla is the only manufacturer known to have passed this limit, although GM is reportedly close behind.

Given this timeline, one particular piece of information mentioned by Kudlow indicates that the subsidies phase-out is expected to occur after GM hits its 200,000 vehicle limit, meaning that it would likely not impact the automaker directly, instead wreak havoc on consumers looking to purchase EVs from other automakers which expect to launch their own fleet of alternative fuel cars around that time period.

“It’s just all going to end in the near future." Kudlow mentions regarding the planned timeline for the phase-out of the tax credits, "I don’t know whether it will end in 2020 or 2021.”

In early October, a bill was introduced which would scrap EV subsidies in its entirety and impose an additional tax on EVs as a whole. Heavily criticized, the bill was challenged with a separate piece of legislation less than two weeks later which would lift the 200,000 vehicle limit ceiling and plan an industry-wise phase-out by 2022. At this time, no change has been adopted and the existing limit of 200,000 vehicles is still in place.