by 
One
of
the
executive
orders
President
Trump
signed
on
Monday
calls
for
ending
federal
subsidies
to
and
preferences
for
electric
vehicles.
With
numerous
media
reports
that
EV
sales
were
already
tanking,
some
think
that
Trump’s
order
will
kill
the
market
for
electric
vehicles.
It
won’t,
but
it
will
shift
things
around.
Curiously,
Trump’s
order
is
supported
by
Elon
Musk.
He
claims
he
simply
opposes
all
subsidies,
but
some
think
that
he
hopes
an
end
to
subsidies
will
benefit
Tesla
by
discouraging
other
automakers
from
developing
new
electric
vehicles.
But
there
is
a
hidden
cost
to
this
order
that
could
severely
impact
Tesla’s
bottom
line.
Trump’s
order
does
not
immediately
eliminate
any
of
the
subsidies,
some
of
which
would
require
an
act
of
Congress,
but
it
directs
his
administration
to
work
towards
that
goal.
The
most
obvious
subsidy
is
the
$7,500
tax
credit
for
buyers
of
electric
cars.
This
subsidy
is
not
as
substantial
as
it
could
be
since
roughly
half
of
American
families
don’t
earn
enough
income
to
pay
$7,500
in
federal
taxes,
and
thus
can’t
take
full
advantage
of
this
tax
credit.
There’s
a
hidden
subsidy,
however,
known
as
regulatory
credits
in
which
various
state
and
national
governments
require
all
automakers
to
sell
a
certain
percentage
of
zero-emission
vehicles.
Those
who
don’t
sell
enough
can
buy
credits
from
those
that
sell
a
surplus.
Since
Tesla
sells
only
electric
vehicles,
it
can
sell
regulatory
credits
to
companies
such
as
Chrysler
that
don’t
sell
enough.
In
recent
years,
Tesla
has
earned
close
to
$1.8
billion
a
year,
or
more
than
40
percent
of
its
profits,
from
selling
regulatory
credits.
This
revenue
represents
a
subsidy
from
buyers
of
petroleum-fueled
vehicles
to
buyers
of
electric
vehicles
and
is
a
major
reason
why
Tesla
has
been
able
to
sell
electric
vehicles
for
less
money
its
rivals
among
the
traditional
car
companies.
A
decade
or
so
ago,
Ford
was
skeptical
of
electric
vehicles,
but
now
it
trails
only
Tesla
in
the
number
of
such
vehicles
it
makes
each
year.
It
seems
likely
that
Ford
entered
the
EV
market
on
such
a
large
scale
mainly
so
it
could
avoid
paying
credits
to
Tesla.
That
bet
didn’t
turn
out
well
for
Ford.
In
the
United
States,
the
regulatory
credits
market
was
created
by
California
and
13
other
states
that
had
required
manufacturers
to
make
electric
vehicles.
Trump’s
order
revokes
the
ability
of
states
to
impose
different
emissions
requirements
from
the
rest
of
the
nation,
thus
essentially
killing
regulatory
credits.
Some
European
countries
are
also
ending
their
EV
subsidies
and
regulations.
Prior
to
Trump’s
order,
the
EV
market
wasn’t
dying,
but
it
wasn’t
doing
great
either.
Tesla’s
worldwide
sales
dropped
by
just
1
percent
in
2024,
but
its
sales
in
the
U.S.
dropped
by
23
percent.
However,
Tesla’s
decline
was
probably
due
to
the
growth
of
EV
sales
by
other
companies,
notably
Ford.
As
a
share
of
the
U.S.
car
market,
pure
EVs
grew
from
2
percent
in
2019
to
around
8
percent
in
2024
while
hybrids
grew
from
around
2
percent
in
2019
to
13
percent
in
2024.
More
than
one
out
of
five
automobiles
sold
in
the
U.S.
in
2024
were
one
form
of
electric
or
another.
Read
the
rest
of
this
piece
at
The
Antiplanner.
Randal
O’Toole,
the
Antiplanner,
is
a
policy
analyst
with
nearly
50
years
of
experience
reviewing
transportation
and
land-use
plans
and
the
author
of
The
Best-Laid
Plans:
How
Government
Planning
Harms
Your
Quality
of
Life,
Your
Pocketbook,
and
Your
Future.
Photo:
Avda,
via
Wikimedia
under
CC
3.0
License.
Go to Source
Author: Randal OToole
