Ending EV tax credit to drive 27% drop in demand — report

Industry experts expect a sharp drop-off in demand if President-elect Donald Trump’s push to end electric vehicle tax credits comes to fruition.

Driving the news: Currently, U.S. EV market share rests at 8.95% after Q3, meaning declines will have a relatively small impact on industry-wide volumes. Even so, analysts expect that cutting incentives will still deal a noticeable blow to sales numbers.

• According to a Bloomberg report, experts from UC Berkeley and Duke University anticipate a 27% fall in EV sales, following the repeal of Biden-era tax credits.

• That equates to a decline of roughly 317,000 units, or about 2% of 2023’s industry-wide sales numbers (15.5 million units).

Zooming in: Unfortunately, ending tax credits is only expected to drive a 0.12% improvement in gas consumption, meaning internal combustion engine sales are unlikely to make up for a decline in EV demand.

Looking ahead: That said, analysts still expect EV sales to continue growing, with or without credits in place.

• Automakers have already invested billions into electrification and are determined to make EVs for themselves as they have for Tesla.

• Many current EV models, including the Ford Mustang Mach-E, are already ineligible for EV credits but continue to sell, although at considerably lower numbers than qualifying EVs. Brands like Rivian and Lucid, who veer more toward luxury prices, are unlikely to see a noteworthy impact from Trump’s plans.

Bottom line: Ending the tax credit is likely to take a considerable bite out of EV demand. However, it is unlikely to spell the end of the electric car market, which continues to expand on a global scale despite growth challenges.

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