Dearly beloved, we are gathered here today to celebrate the life of the electric vehicle tax credit.
Signed into law by former President Joe Biden in 2022 as part of the Inflation Reduction Act, for the duration of its three-year life, the electric vehicle tax credit eased the financial burden for manufacturers and consumers as Americans embarked on the transition from fossil fuel-dependent cars to the more climate-friendly electric option.
The transition to cleaner electric vehicles is a key part of the global effort to reduce humanity’s carbon footprint and fight against climate change. But electric vehicles are a new industry, the technology is still expensive and growing, and they have a tough fight against the heavily established, and still directly and indirectly subsidized fossil fuel-dependent auto industry.
“We need incentives to help try to replace as many gasoline vehicles with electric vehicles as possible,” David Reichmuth, senior scientist at the Union of Concerned Scientists’ Clean Transportation Program, told Gizmodo. “Transportation is the largest source of global warming pollution in the country, and passenger vehicles are the largest source within transportation. There’s really no way to make the reductions we need to make to avoid the worst damages from climate change without switching from fossil fuels to cleaner electric vehicles powered by renewable energy.”
The tax credit also helped build up the American electric vehicle industry and bring manufacturing back to North America at a time when Chinese and European competitors are running circles around the American electric vehicle industry. To qualify for the electric vehicle tax credit, the vehicles were required to have been assembled in North America.
But that all comes to an end today, as the tax credit officially expires. President Trump is to thank for that.
Trump was never shy about his distaste for the electric vehicle tax credit on the campaign trail. When elected President, it was one of his first orders of business to start the dismantling process of the incentive. That process was finalized when Trump’s “big beautiful” spending bill passed Congress and was signed into law in July.
What was the tax credit?
The electric vehicle tax credit was threefold: a new car sales tax credit of up to $7,500 and a used car sales tax credit of up to $4,000, both of which consumers could get back on their tax returns, and a leasing tax credit of up to $7,500 that was claimed by leasing companies and translated to lower costs for consumers.
Even before Biden pushed for the electric vehicle tax credit, climate-friendly policy in one shape or another had protected American electric vehicle manufacturers for more than a decade.
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