Electric car tax credit could be scrapped within months despite warning it could 'devastate' drivers

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GB NEWS
Felix Reeves

By Felix Reeves


Published: 30/06/2025

- 09:44

The incentive could be removed at the end of September

The United States could scrap long-standing incentives for electric vehicles as President Donald Trump could make sweeping changes in the near future.

Republican lawmakers are finding themselves caught between party loyalty and constituent interests as they grapple with electric vehicle policies that could affect thousands of jobs in their districts.


The conflict has intensified as Senate Republicans push forward with legislation that would terminate the $7,500 (£5,474) tax credit for new electric vehicle purchases by September 30.

Despite this, some GOP members privately seek federal funding for EV manufacturing facilities in their constituencies.

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Parked Tesla models and a man charging an electric car

The United States could vote to axe incentives for purchases of electric cars

REUTERS/GETTY

The tension between supporting President Trump's agenda to eliminate clean energy incentives and protecting local economic interests has created an uncomfortable position for several Republican legislators.

The proposed Senate Republican tax and budget bill would end the $7,500 (£5,474) tax credit for new electric vehicle sales and leases on September 30, along with the $4,000 (£2,919) credit for used EVs.

The legislation represents a significant reversal from former President Biden's policies that promoted electric vehicles and renewable energy to combat climate change and reduce emissions.

Beyond eliminating tax credits, the Senate bill includes provisions to remove penalties for failing to meet Corporate Average Fuel Economy standards, making it easier for manufacturers to produce petrol-powered vehicles.

Elon Musk and President Donald Trump sitting in a Tesla

President Trump has revealed mixed opinions about electric cars, despite his past working relationship with Tesla CEO Elon Musk

REUTERS

President Trump has already signed a congressional resolution blocking California's plan to end sales of petrol-only vehicles by 2035, a policy adopted by 11 other states, representing a third of the US car market.

Approximately 85 per cent of investments stemming from the 2022 climate legislation have flowed into Republican districts, according to an analysis by the nonpartisan group E2.

Alex Jacquez, former senior official in the Biden administration and now chief of policy and advocacy at Groundwork Collaborative, said: "These funds were appropriated specifically to help autoworkers stay in their jobs at plants at risk of closing and devastating entire communities."

The concentration of clean energy investments in GOP-held areas has created a dilemma for Republican lawmakers who must balance their opposition to climate programmes with the economic benefits these initiatives bring to their constituents.

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This economic reality has prompted some Republicans to privately advocate for preserving funding that could protect manufacturing jobs in their districts.

Representative Nancy Mace, a South Carolina Republican, privately requested the Trump administration release approximately $285million (£208million) for a Mercedes-Benz plant to convert to electric vehicle production, according to a letter obtained by The Washington Post.

The funding request, sent to Energy Secretary Chris Wright on Tuesday, seeks money through a grant programme approved under Biden's 2022 climate legislation for the Mercedes-Benz Vans plant near Charleston, South Carolina.

Mace wrote that the German company's efforts to produce a light-duty electric van prototype would create 800 jobs and "ensure America-made options remain available in the commercial vehicle sector".

The Mercedes-Benz factory in Charleston, South Carolina, produces the Sprinter and eSprinter van models \u200b

The Mercedes-Benz factory in Charleston, South Carolina, produces the Sprinter and eSprinter van models

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Her spokeswoman, Sydney Long, stated that while Mace has "raised concerns about reckless federal spending," she has "always fought to bring jobs and investment home to South Carolina".

The internal Republican divisions extend beyond individual requests, with more than a dozen House Republicans lobbying the Senate to preserve clean energy incentives in the tax bill they had previously approved.

Representative Jen Kiggans of Virginia added: "While we were proud to have worked to ensure that the bill did not include a full repeal of the clean energy tax credits, we remain deeply concerned by several provisions."

The letter criticises the legislation for causing "significant disruption to projects under development and stop investments needed to win the global energy race".