Automakers Call For Gradual Tax Credit Phase-Out Instead Of Trump’s Rug Pull - Related to cost, trump’s, phase-out, seeking, report:

Automakers Call For Gradual Tax Credit Phase-Out Instead Of Trump’s Rug Pull

Automakers are uncertain about the future of the Inflation Reduction Act and the EV tax credit.

If it's repealed, manufacturers are calling for a multi-year phase-out.

An instant repeal could cost the [website] thousands of jobs and billions of dollars, plus an uncertain future of American position in the global EV race, they argue.

Automakers have spent the last few years betting billions on the EV race. New factories, robust supply chains and big battery plans peppered not just across the globe, but also planted deep within America's auto manufacturing belts. But now, with President Trump at the helm and Tesla CEO Elon Musk on a wild cost-cutting mission across the government, the EV tax credit is poised to be gutted.

Needless to say, manufacturers are scrambling to soften the blow that Trump warned could be coming since before he was elected in November. The latest pitch? , automakers are petitioning the federal government that if the repeal of the Inflation Reduction Act is inevitable, just don't pull the rug out on them. Instead, they're asking for elements like the EV tax credit to be phased out over several years.

To be clear, this is a delicate dance. Automakers need to stay on Trump's good side—especially with the [website] government playing a game of tariff-chicken with Canada and Mexico. But these manufacturers also can't just ignore the fact that incentives for their most competitive EVs could disappear overnight.

Executives at General Motors and Ford have been making the rounds in Washington to advocate for automakers. For example, GM CEO Mary Barra not long ago met with Trump to discuss tariffs and how administrative policies could affect the [website] auto industry. Ford CEO Jim Farley is slated to meet with Congress this week—his second trip to Washington in three weeks—to talk business.

“We have the potential repeal of various IRA elements,” noted Farley at an investor conference in New York on Tuesday, . “We’ve already sunk capital. And many of those jobs will be at risk if the IRA is repealed, [if] big parts of it [are] repealed.”.

It would seem that the auto industry really isn't sure what's going to happen with the IRA, including the EV tax credit. They have been hedging their respective bets, though. Hyundai was one of those companies that significantly upped its spending on political lobbying when Trump vowed to nuke EV subsidies last year. But an uncertain future means continuing to pressure those passing the laws for a potentially favorable outcome.

The argument being made isn't just about the free money automakers are getting (although that may certainly sweeten the deal). Car companies made big decisions based on the promise of government funding and if that goes away, the industry could be in a world of hurt.

A gradual phase-out would allow automakers time to lower EV costs. Battery prices are a prime example. While they're slated to continue to fall through the top of the decade, the battery pack still makes up a significant chunk of an EV's cost. Certain EVs are only competitive because of the tax credit, meaning that eliminating the incentive could result in car companies making the decision to take a huge loss on the model, or maybe to simply discontinue it entirely.

Keeping the credits in place may also protect thousands of jobs. The battery belt—the stretch of states between the midwest and southeast [website] that benefit from new and planned battery factories—has become a hub for EV manufacturing. Many of these jobs have come into fruition simply because the IRA's tax incentives. Should those incentives go away without warning, those jobs could be at risk. Data from the American EV Jobs Alliance demonstrates that the [website] has invested $200 billion to create 200,000 EV-related jobs across 12 states (meaning, an average cost of $1 million per position).

An instant repeal would also put the [website] at an even further disadvantage in the ongoing EV spat between the [website] and China. The IRA helped to build a more robust supply chain that utilizes domestic manufacturing and sourcing, reducing the reliance of Chinese components and battery materials. A sharp rise in cost and looser sourcing requirements could lead to an influx of Chinese EVs in the [website]—something that the IRA (and tariffs) were meant to protect against.

"It's messed up. But I would say, if you must eliminate it, have a ramp down," mentioned Kia America COO Steve Center, in an interview with InsideEVs in November. He continued: "A lot of other companies have spent a lot of money trying to comply with the regulations. Don't keep changing the regulations."

Automakers are pleading, but it's unclear if Trump or Congress are actually listening.

Trump hasn't hid his skepticism towards EVs and EV-related subsidies. And his bubbling bromance with Elon Musk, who also called for ending all subsidies, doesn't inspire confidence that the tax credit is sticking around.

House Republicans are will be essential deciding whether or not key pieces of the IRA are repealed. This leaves automakers to play defense and convince lawmakers of the IRA's necessity. There's evidence they may be hesitant to repeal, it though: 19 of the 25 major automaker battery and manufacturing plants being stood up are in GOP-controlled congressional districts. Many of the remaining plants, , are in states that supported the Trump presidency in the November election.

Should the IRA be repealed or cut in an official capacity, it will likely come as part of a reconciliation bill. This means that lawmakers will be forced to weigh the benefits of the job losses against Trump's priorities and campaign promises.

Automakers know they're walking a thin tightrope. EV production needs to keep moving forward and executives need to do what they do best: lead in uncertain times. The current administration seems eager to roll back incentives, but if done too quickly, EV adoption could be stalled, jobs killed and the [website] auto industry left behind while the rest of the world pushes forward. If it does happen, automakers will have no choice but to adjust quickly or risk losing billions in investments that can't be easily walked back.

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Report: GM, Ford seeking gradual EV tax credit phaseout

Automakers are already preparing for the federal government stop electric vehicle tax incentives, lobbying for a gradual phaseout rather than an abrupt end, Bloomberg reported Tuesday.

Several automakers, including Ford and General Motors, along with industry lobbying groups, have asked the Trump Administration and Republican Congressional lawmakers to preserve some EV incentives from the Biden Administration's Inflation Reduction Act (IRA) as long as possible, , which cites anonymous information familiar with the matter.

The IRA, with its manufacturing incentives and tax credits, was predicted to double EV sales by 2030 vs. the previous forecast. But by all previous accounts, the Trump Administration was aiming to make nixing the federal EV tax credit a priority—with support from Elon Musk and Tesla.

, one of the ideas being discussed in the event that Trump eliminates it is a three-year credit sunset that would buy more time to reduce costs of new EVs and make the loss of the tax credit less impactful.

Automakers are reportedly also rallying to keep the so-called leasing loophole that allows automakers with captive financing companies to get a $7,500 tax credit for leased vehicles, and pass the savings on to the customer. This allows for an equivalent discount on EVs that wouldn't normally qualify for the credit due to price, battery-materials sourcing, or the customer's income.

That led to a surge in EV leasing in recent years—with federal money subsidizing luxury EVs built in other countries. That's likely not going to be a winning argument in Congress, where the IRA's EV tax credit barely squeaked through the first time around.

Even if automakers fail to convince Republicans to keep the federal EV tax credit, increased state incentives may help make up for it. California plans to provide its residents with $7,500 rebates if Trump kills the tax credit, but it's seeking to exclude Tesla, ostensibly to provide more incentives to brands with less market share in order to promote competition.

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Trump Causing 'A Lot Of Cost And A Lot Of Chaos' In Auto Market: Ford CEO

The auto industry is sounding the alarm about proposed tariffs on Mexico and Canada.

Ford CEO Jim Farley is pretty clear that he's unhappy with what he's seen from the Trump administration.

"So far what we’re seeing is a lot of cost and a lot of chaos," he expressed at a conference.

Donald Trump wants to be a business-friendly president. The main problem so far, however, is that his policies don't match that pitch. He sent the stock market into a tail-slide when he unveiled 25% tariffs on Canada and Mexico, only to delay them right before they took effect. Ford CEO Jim Farley didn't mince words about the problems this is creating for the firm, as a new study from Automotive News details.

“President Trump has talked a lot about making our [website] auto industry stronger, bringing more production here, more innovation to the [website], and if this administration can achieve that it would be, I think, one of the most signature accomplishments,” Farley noted, per Automotive News. “So far what we’re seeing is a lot of cost and a lot of chaos.”.

He mentioned this during the Wolfe Research Auto, Auto Tech and Semiconductor Conference, during which Trump has been a key topic. During the President's previous term, he renegotiated the trade agreement governing commerce between the [website], Mexico and Canada. His [website] Agreement (USMCA) succeeded the North American Free Trade Agreement (NAFTA), with both allowing broadly duty-free trade between the major partners. But Trump no longer seems to back his own agreement, arguing that Mexico and Canada are depriving the [website] of jobs.

This is a headache for companies like Ford and General Motors, which have invested billions in Mexico and Canada, relying on free-trade agreements to export Mexican- or Canadian-built cars into the [website] Farley says Ford has worked hard to become USMCA compliant, with most of its content coming from one of the three nations. But now the new tariffs threaten to blow up that work.

The Chevy Blazer EV and Equinox EV are both built in Mexico. That could be a problem for GM's EV ambitions.

Ford has a plan for how to address this issue, and I highly recommend you read the Automotive News story for the full breakdown. But Farley is saying out loud here what many companies are saying behind the scenes: Automotive supply chains take years to set up, and they can't be relocated on a whim. Especially given that Trump's orders so far have seen delays, court-ordered pauses and constant whipsaws. Businesses depend on regulatory stability and certainty that Trump isn't providing.

Of course, the effort to build more products domestically is not without merits. Trump's push to bring jobs back was a good campaign promise for a reason: Americans miss the days when a robust manufacturing economy provided upward mobility and stable middle-class paychecks to broad swaths of the public. Yet it's a strange time for such a push.

While all politicians want to increase the number of available jobs, the [website] economy has arguably the opposite core issue right now. We are near full employment, and worries over consumer prices seem to be the thing weighing down most pocketbooks. Tariffs almost always result in higher prices for consumers, and even if they result in more domestic jobs, there are plenty of signs that the [website] can't absorb even more demand for workers without it increasing inflation.

I won't claim to know the answer. There's no absolute truth in free trade or protectionism, no perfect way to balance our desire for high-paying manufacturing jobs with our desire to have everything we could possibly want, at the lowest possible price. But one thing is clear for business: If American companies are going to succeed, to lead the world, they need to know the rules of the game they're playing. Immediately tearing up all their existing assets and plans is not a viable commercial strategy. And if the [website] has a messy divorce from its closest trading partners, you, the auto industry and everyone else is going to feel that pain.

“Let’s be real honest: Long-term, 25% tariffs across the Mexican and Canadian border would blow a hole in the [website] industry that we have never seen,” Farley expressed. Let's hope it doesn't come to that.

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