Electric Vehicles Targeted by President Trump’s Executive Order
President Trump has proposed several potential tax changes. As his presidency evolves it becomes increasingly important for taxpayers to stay informed about how these changes might impact their financial planning and obligations. This is the second of a series of articles to tax clients to help you keep up to date on the thinking on Capitol Hill on proposed changes so you can plan appropriately. Please contact this office with questions.
President Donald Trump has targeted electric vehicles by revoking a 2021 executive order from his predecessor, Joe Biden. Biden’s order aimed to ensure that half of all new vehicles sold in the U.S. by 2030 would be electric. Although Biden's 50% target was not legally binding, it had garnered support from both U.S. and international automakers. Currently less than 10% of vehicles on U.S. roads are EVs.
In his executive order, Trump announced the suspension of unspent government funds from a $5 billion fund intended for the creation of vehicle charging stations. He also called for the termination of a waiver allowing states to adopt zero-emission vehicle rules by 2035 and indicated that his administration might end EV tax credits.
Trump plans to instruct the Environmental Protection Agency (EPA) to reconsider rules that mandate stricter emissions standards, which would require automakers to sell between 30% to 56% electric vehicles by 2032 to comply with federal emissions regulations. These rules are paralleled by those issued by the U.S. Transportation Department.
Additionally, Trump expressed his intention to repeal a waiver granted to California by the EPA in December, which allows the state to phase out the sale of gasoline-only vehicles by 2035—a rule adopted by 11 other states. He stated that the EPA should terminate state emissions waivers that limit the sales of gasoline-powered cars where appropriate.
Trump's order suggested that his administration should consider eliminating subsidies and other government-imposed market distortions that favor electric vehicles over other technologies, effectively mandating their purchase. He has previously mentioned the possibility of repealing the $7,500 consumer tax credit for electric vehicle purchases as part of broader tax reform. Presumably that would also include the $4,000 credit for used EVs. Any change to or elimination of the EV credit would need to be by legislation passed by Congress.
During his campaign, Trump pledged to end Biden's "EV mandate" without detailing specific policies. Biden, on the other hand, consistently declined to endorse a specific date to end the sale of internal combustion engines. Trump also promised to increase U.S. oil production, and to roll back Biden's clean-energy initiatives, which include subsidies for wind and solar power and the mass production of hydrogen.
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