Report: Elimination of Electric Vehicle Tax Credit Will Cause Short-Term Plunge in Demand
The potential elimination of the $7,500 tax credit for EVs may result in a short term plummet for the EV industry, according to Inside EVs.
A recent report from Bloomberg shared that EV demand could immediately tumble by 27% in the event that tax credits are nixed, based off numbers from Joseph Shapiro and Felix Tintelnot, associate professors at UC Berkeley and Duke University, respectively.
While Shapiro and Tintelnot are expecting the incoming Trump administration to do away with EV tax credits, most of the damage is also expected to be short-term, with Americans expected to consume just 5% more gas in the next decade if that happens.
Morgan Stanley analyst Adam Jonas expects EV adoption to continue growing in the long-term, but the removal of EV tax credits will put automakers in a bind as they struggle to produce affordable EVs for consumers. Companies have already invested hundreds of billions of dollars into EV production, and that cost may be shifted into gas-powered cars in order for them to make a profit back.
