House Speaker Mike Johnson indicated that the $7,500 federal EV tax credit is likely to be cut in the next budget resolution, raising the cost of EVs at a challenging time when tariffs are already inflating prices. This move follows a global trend of reducing incentives, which may negatively impact the affordable EV market. Despite some opposition, the GOP seems poised to proceed with this cut, even as automakers face production and sales challenges with tariffs on imported vehicles gradually affecting profitability.
"I think there is a better chance we kill it than save it," House Speaker Mike Johnson, R-La., said in the interview with Bloomberg. "But we'll see how it comes out."
This follows similar developments in markets like Germany and even China, which have massively tapered incentives in recent years.
Firms like Ford, General Motors and Stellantis often outsource production of their least profitable models to pad margins.
Now they will just have to do so at a bigger loss.
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