$7,500: this is the amount of the tax credit that the Trump administration plans to eliminate for the purchase of an electric car. A surprising decision… supported by Tesla, the American electric giant.
As expected, Donald Trump’s transition team is considering eliminating the $7,500 tax credit for purchasing electric vehicles. Even more surprising, Tesla, the undisputed market leader, actively supports this initiative which could nevertheless slow down the country’s energy transition.
According to ReutersTesla representatives made clear their support for ending this subsidy in meetings with Trump’s transition committee. A position which may seem paradoxical for the world’s leading manufacturer of electric vehicles, but which hides a much more sophisticated strategy.
Elon Musk, billionaire and boss of Tesla, assumes this perfectly. His calculation is simple: Tesla can survive without this aid, unlike GM, Ford or Stellantis who are still struggling to make their electric cars profitable.
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Elon Musk’s strategy
The rapprochement between Tesla and the Trump administration is not new. Since the November 5 election victory, Elon Musk has made numerous appearances at Mar-a-Lago, Donald Trump’s private club in Florida. This proximity even resulted in a surprise appointment: Elon Musk will co-direct the new Department of Government Effectiveness.
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The challenge for Tesla is clear: maintain its domination of the American market while weakening its competitors. Indeed, unlike other manufacturers who still largely depend on government aid to make their electric cars attractive, Tesla would benefit from a loyal customer base that is less price sensitive.
This strategy is not without risks. L’Alliance pour l’innovation automobile (Alliance For Automotive Innovation), which represents almost all manufacturers with the exception of Tesla, has already sounded the alarm.
In a letter to Congress, she emphasizes that these tax credits are “ essential to solidifying the United States’ position as a global leader in the future of automotive technology« .
The financial markets also seem worried: Tesla shares fell -5.61% following these announcements, those of Rivian, -11.80%.
To pass this reform, the Republicans plan to use a legislative procedure called ” reconciliation“, making it possible to avoid Democratic obstruction in the Senate. A tactic similar to that used by Biden to pass his Inflation Reduction Actwhich had precisely introduced these tax credits.
Time will tell if Elon Musk’s bet was the right one.
Source: www.frandroid.com
