Princeton Study Suggests Trump’s Potential Elimination of EV Tax Credit Could Deal Devastating Blow to U.S. Industry

Donald Trump has been clear in his intent to eliminate the EV tax credit enacted by the Biden administration. And while you can take one or the other side in this debate, the fact that this decision would have a lot of impact on the U.S. market and economy is undeniable. But what kind of impact?
Trump and his supporters will certainly argue that this will ultimately have a positive impact on the U.S. economy, but a recent study by scientists from Princeton University suggests that it could be the complete opposite.
The study was produced as part of the REPEAT Project, a Princeton University group that analyzes environmental policy, and as the study’s leader, Jesse D. Jenkins, says, it “is also the only analysis I’m aware of to date that draws the connection to U.S. manufacturing as well.” So, what are the conclusions?
In short, the summary of the article lists the following conclusions:
- Sales of battery electric vehicles could drop about 30% in 2027 and 40% in 2030 relative to a scenario where current policies are continued.
- The share of battery electric vehicles in new light vehicle sales could drop from about 18% to 13% in 2026 and 40% to 24% in 2030.
- Cumulatively, 8.3 million less EVs and plug-in hybrids could be on U.S. roads in 2030.
- As much as 100% of planned construction and expansion of U.S. electric vehicle assembly and half of existing assembly capacity could be at risk of cancellation or closure.
- Between 29% and 72% of battery cell manufacturing capacity currently operating or online by the end of 2025 would also be unnecessary to meet automotive demand and could be at risk of closure, in addition to 100% of other planned facilities.
- There would be further (unquantified) impacts on U.S. materials, parts, and component suppliers upstream of EV and battery assembly.
As you can see, the conclusions of the study are pretty grim. It’s not just the EV market that would be affected, but if Trump removes the tax credits, it could lead to a domino effect that would impact several related industries.
And while the struggle to keep or delete the tax credit continues, it is a certain fact that the U.S. consumers will bear the biggest burden of this issue, as the insecurity over a potential removal is also impacting the market in a major way.
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