The Trump administration’s plan to eliminate federal incentives for electric vehicles (EVs) is expected to slow the growth of the EV market in the US, but it won’t bring it to a complete halt, according to forecasts.
On Thursday, Republicans in the US House passed a bill that would eliminate tax credits of up to $7,500 for EV buyers, which were part of the 2022 Inflation Reduction Act. The bill now heads to President Donald Trump’s desk.
The decision to end the tax credits will be a significant blow to the EV market, but some forecasts suggest that the industry will continue to grow, albeit at a slower pace. “It’s not going to stop the adoption of electric vehicles, but it’s going to make it more challenging,” said Elaina Buchanan, a former General Motors economist.
The average price of US drivers pays for an EV has ticked slightly lower in the US, from $53,438 in January 2023 to $52,314 in April, according to a recent BloombergNEF report. Still, electric vehicles remain more expensive than their gas-powered counterparts, with some models costing twice as much.
Despite the potential setback, some industry experts believe that the EV market will continue to grow, driven by falling battery costs and increasing demand. “People who have the means to go buy a Rivian or a Lucid are still going to do that,” said Ingrid Malmgren, senior policy director at advocacy group Plug In America. “The impact is going to be felt more by lower-income Americans.”
The loss of federal incentives will also affect the used EV market, as some buyers may be deterred by the higher upfront costs. “You’re more likely to find a lower-income American buying a used EV,” Malmgren said. “The impact of this bill is going to be felt more by those who are already struggling to afford a vehicle.”
Outside the US, however, EV adoption continues to grow. The White House has also promised to lower regulations on tailpipe emissions and moved to block a California policy to ban gas-powered car sales by 2035.
The EV market remains robust, with nearly 300,000 EVs sold in the US in the first quarter of this year, down from the 315,000 estimated a year ago. BloombergNEF forecasts that just 40% of the US market will be electric by 2035, down from its previous estimate of 52%.
