Trump Advisor Kudlow Deals Blow To EV Subsidies

Larry Kudlow, chief economic adviser at the White House, has called for an end to electric vehicle subsidies and government help for renewable energy projects, Reuters reports, citing a statement from Kudlow.

“As a matter of our policy, we want to end all of those subsidies,” Kudlow said. “And by the way, other subsidies that were imposed during the Obama administration, we are ending, whether it’s for renewables and so forth. It’s just all going to end in the near future. I don’t know whether it will end in 2020 or 2021.”

At the moment, buyers of electric vehicles are entitled to a tax credit in the range of US$2,500 to US$7,500. But this incentive is limited: it is applicable until sales reach 200,000 vehicles per manufacturer. After this number is reached, the subsidies start to decline gradually.

Tesla is unsurprisingly the only company that has already hit the 200,000-vehicle target, announcing earlier this year that it had met this threshold. Other carmakers have yet to sell 200,000 plug-ins, and they may even have another few years before this happens.

Reuters notes how president Trump threatened GM to cut its EV subsidies after the carmaker said it plans to close five factories in the United States and lay off more than 14,000 people citing higher costs and a shift in focus to trucks and electric vehicles. Trump also threatened to raise car tariffs in retaliation.

Kudlow, however, said there is hardly any way to punish an individual carmaker in this manner. “I think legally you just can’t,” he said.

It also remains doubtful how the administration would enforce the removal of subsidies since it is the prerogative of Congress to introduce them, which it did, and to remove them. With the Democrats winning a majority in the House in November, the doubts around the White House’s plan for a subsidy removal grow. Many legislators have been pushing fore more incentives rather than fewer.

By Irina Slav for Oilprice.com

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