The Trump administration may seek to end subsidies for electric cars and renewable energy sources. White House economic adviser Larry Kudlow said during a recent interview that he expects subsidies for buying electric cars will end in 2020 or 2021. Kudlow told reporters, “As a matter of our policy, we want to end all of those subsidies.”
It’s unclear how the administration plans to cut the tax credits. The White House cannot end congressionally mandated subsidies on its own. Since Congress enacted them, it would have to act to end them.
Electric car buyers currently get tax credits of $7,500 per vehicle. However, that credit phases out over a one-year period starting the second calendar quarter after a manufacturer hits a 200,000-vehicle threshold. A handful of companies are approaching that level, with General Motors Co., the largest U.S. automaker, expected to reach it in coming months.
Some lawmakers have sought to extend the credit by raising the 200,000-vehicle cap. However, Republicans have pushed back against the subsidies and other policies meant to promote renewables over traditional sources. Democrats want to transition the country to 100 percent renewable energy for electricity to deal with climate change. The differing ideals have caused gridlock for the issue in Congress.
Utilities also get tax credits for doing things to promote renewable energy sources, such as producing wind power and installing solar power equipment. The tax credits were enacted before former President Obama took office as a way for the country to transition away from heavily polluting energy sources like coal. Those incentives are on track to phase out in the coming years.
Kudlow made his statement on the subsidies in response to a question from reporters on General Motors’ announced U.S. plant closings and layoffs last week. The company’s plans have sparked outrage in Washington from both parties. President Donald Trump last week directed agencies to explore how to cut GM off from federal spending if the company closed plants in the U.S. Kudlow said in his statement that no plans are currently in place to do so.