Will Trump make Musk squeal? Slashing of EV Tax credit likely to hit Tesla, VW, GM hardest

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With President-elect Donald Trump having indicated that his administration will chop the electric vehicle tax credit installed by the Biden White House, all eyes are on what the effects will be.

One factor is that EV brands are not created equal when it comes to tax credits. The first factor is where materials, particularly batteries, are sourced. Another is where the EV was assembled. Those with North American parts and assembly qualify for $7,500 while others get a $3,750 break. Meanwhile, some do not qualify at all.

Another possible result of credit elimination is the consumer’s perception of the effect. A new study by J.D. Power finds that some EV buyers are more likely than others to consider the credit as a critical part of their decision among brands.

Overall, the study, titled “How Influential are EV Tax Credits on Vehicle Sales?,” found that 64% consider the credit a “primary driver” of their decisions. However, there are big differences between brands.

A jolt in Germany?
For intance, 81% of Volkswagen buyers view the credit as a primary driver. This is followed by 77% for Chevy and 72% for Tesla. At the far end of the spectrum, “just 32% of Hyundai buyers, 24% of Kia buyers and 21% of Toyota buyers selected tax credits and incentives as a primary reason for their vehicle selection.”

The news is particularly bad for VW, which is struggling the most among the world’s largest car companies. Its EV plans are in tatters, its global sales are down and it may lay off tens of thousands of people in its home market of Germany. It has never cut German workers in its history.

Kia and Hyundai often sit in second place in the U.S. EV market share, though they remain well behind Tesla, which has about half the market.