Trump Could Spell Trouble for Tesla

Getty Images / Kevork Djansezian

Donald Trump’s victory has shaken up the markets today and clean energy is no exception — today, Tesla’s stock dropped four points. While Trump hasn’t outlined many clear environmental policies — aside from a threat to cancel Paris Climate Change Deal — he’s hinted at eliminating EPA standards for fuel-efficient car manufacturing. This could result in a huge blow the government’s support of the clean energy industry, including tax credits for consumers who buy electric cars.

Thanks to the Tax Payer Relief Act of 2012, right now buyers can receive up to a $7,500 tax credit for buying an electric car, so long as the manufacturer that produced it has not reached a federally mandated cutoff of 200,000 vehicles. For buyers of the Tesla Model 3, the credit decreases the price of the car from $35,000 to $27,500. Even for buyers after that initial cap, a partial credit would be available during a “phase out” period. Car companies benefited from the program as well; for leased vehicles, the credit went to the company, not the consumer.

Trump has expressed a strong support for U.S. oil and coal industries, so his administration coming out in favor of electric vehicles seems incredibly unlikely. Nothing in Trump’s tax plan mentions incentives for electric energy. Congress would have to renew the act next year in order for the tax credits to continue.

Though the credit could be on its last legs, panic has yet to hit manufacturers.

“I don’t think [the risk to Tesla] is very high,” Elon Musk, founder of leading electric car company Tesla, said before the election. “You can go anywhere in the United States on a Tesla Supercharger Network right now.”

Elon Musk says he's not worried about the future of Tesla under Trump.

Getty Images / Justin Sullivan

Analysts are more cautious. “If [zero emissions vehicle regulations] were removed, for example, Tesla Motors would lose a major source of income at a time when it is looking to ramp up its operations in order to launch the Model 3,” a report from BMI research stated.

If the credit program does end, states would likely have to pick up the slack. California already offers a rebate for electric car owners. But the administration could pressure California into ending its current ZEV mandate, which requires 15 percent of all vehicles sold in the state to be emissions-free by 2025.

Of course, there is one big overlap between Trump’s vision for American and the future of electric vehicles: infrastructure. Trump wants to create jobs by improving the nation’s infrastructure, and some of this could benefit electric cars. The federal government announced on November 4 that it would be building an 85,000 mile-long network of “alternative fuel corridors across 35 states to help usher along an electric future. But given Trump has also stated he plans to slash the national budget by $6 trillion, it’s unclear if the $4.5 billion in loan guarantees the White House unlocked for electric car technology this summer will still be available come next year.

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