There’s a lot of speculation in the news right now regarding the incoming Trump administration’s plans for key energy and climate policies. Nobody can predict exactly what will happen when, but one thing is clear: if you are considering purchasing or leasing a new or used electric vehicle (EV) in the next couple of months, do it before the end of the year if you can.

What has the incoming administration said about EV tax credits? 

Incoming President Trump has made it very clear that it will be a priority of his administration to get rid of the federal tax credit for new and used EVs. However, he can’t do that unilaterally. Because the federal tax credit was created by the Inflation Reduction Act (IRA), it can only be completely removed if Congress passes another law eliminating it or changing it. However, the incoming administration can also adjust the implementation rules of the existing tax credit to the point where no vehicles qualify. 

While Elon Musk supports removing the EV tax credit, the Alliance for Automotive Innovation, a trade association of major automakers, is lobbying to keep it. 

What’s going to happen, and when? There’s no way to know. What we do know is that these vehicles are eligible for the federal tax credit through the end of calendar year 2024, so if you’re in the market and can take action now, now’s the time to move.

Why the end of the year and not before Inauguration Day? 

The IRA laid out very specific rules to determine whether a particular vehicle qualifies for the federal tax credit or not. Those rules include one provision that kicks in on January 1, 2025: at that point, if any of the critical minerals in the vehicle’s batteries are “extracted, processed, or recycled” by a “foreign entity of concern”, the vehicle is ineligible. “Foreign entities of concern” are defined as China, North Korea, Russia, and Iran – and any companies owned or controlled by one of those countries. 

China dominates the market for battery minerals, so this provision will dramatically limit the list of vehicles that are eligible for the federal tax credit. Unfortunately, we have no way of knowing in advance how much. So even if we didn’t have an incoming administration hostile to the EV tax credit, it would be a good idea to purchase before the end of calendar year 2024. 

Why does this matter if I plan to lease? 

A lot of EVs have excellent lease deals available right now because the leased vehicles are eligible for the commercial tax credit, and that tax credit doesn’t have the same complicated mineral and battery requirements as the consumer tax credit. That, too, is now at risk from the incoming Trump administration. So even if you plan on leasing, it’s a good idea to move before the end of the year. 

What about other EV provisions? 

There are lots of different federal policies and programs that impact the uptake of EVs beyond just the federal tax credit. Here, we’ll go through a few of them.

The Inflation Reduction Act 

The IRA did not just create a tax credit for the purchase of electric vehicles; it also includes tax credits and other incentives to build up manufacturing of both EVs and batteries within the United States. (In fact, the structure of the tax credit itself encourages more domestic manufacturing, as to be eligible for the tax credit, any vehicle model has to have a certain percentage of the minerals or battery components produced, assembled, or recycled in the United States or countries with whom we have a free trade agreement.)  

There are different trackers available to see the impact of the IRA (we recommend this one from Clean Economy Works and this one from Atlas Public Policy), but these images below from The Big Green Machine of the Environmental Studies Department at Wellesley College tell the story the best: the IRA has resulted in billions of dollars in investment in the EV supply chain within the United States, and most of that investment is occurring in districts held by Republican congresspeople. Because of the business focus of these provisions and the political distribution of those investments, many analysts are assuming that these provisions of the IRA are relatively safe.

Federal Vehicle Efficiency Standards 

The federal government has a series of regulations that cause automakers to increase the average efficiency of the vehicles they sell over time. Over the decades, these standards have been shown to dramatically save consumers money and reduce air pollution. Here’s a graph from the 2024 EPA Automotive Trends Report, which shows just how much emissions have reduced over the decades – and how much of an impact EVs are having recently.

We last wrote about the importance of these standards in April, when the Biden Administration released new standards for several sets of pollutants. The previous Trump administration weakened these rules, and the incoming administration has made it clear they want to do so again. However, automakers are actually lobbying to keep the Biden standards. Why? Because they’ve already invested in the transition and want to remain competitive. How this all plays out will remain to be seen. 

Electric Vehicle Infrastructure Funding 

The Bipartisan Infrastructure Law passed in 2022 set aside $5 billion to build DC Fast Charging along highways all across the country through a program known as the National Electric Vehicle Infrastructure program (NEVI). Though not all of those stations are yet in the ground by any means, it seems this funding will be safe because most of the NEVI funds will be formally committed by inauguration day. The companion program to NEVI, the Community Fueling Infrastructure (CFI) program, will likely not have been able to commit all of its $2.5 billion in funding by inauguration day, so we may see some reductions there. 

Stricter Standards 

Finally, since the passage of the Clean Air Act, California has had the right to set stricter vehicle efficiency/emissions standards than the federal government, and states like Massachusetts and Rhode Island have had the right to adopt CA’s standards. The Environmental Protection Agency must approve a special waiver before CA can do so – and before any so-called “Section 177 state” can jump on board. This is the process by which Massachusetts and Rhode Island, for example, have adopted the Advanced Clean Cars II standards, which are the underpinning of both of our state’s strategies to reduce emissions in the transportation sector. Trump has made it clear that he will go after this legal framework, and attorneys general across the country are gearing up for legal battles to protect it. This is going to be a very important battle to watch.

So, if you’re in the market...

If you’re in the market for a new or used EV, now is a good time to buy. Automakers and dealers are discounting EVs in light of the coming uncertainty (anecdotally, we’ve heard this from folks in our Drive Green Community Facebook Group as well). A reminder: the average price of a new gas car in October was around $47,000. There are several EV models that start well below that even before the federal tax credit or state rebate. Learn more about them here: Drive Green | Meet the cars