- EV stocks fell on Wednesday after a report said President-elect Trump plans to cut EV tax credits.
- The $7,500 tax credit was part of Biden's Inflation Reduction Act, put into place in 2022.
- Tesla CEO Elon Musk, a Trump ally, previously said ending the tax credits would hurt US EV companies.
Electric vehicle stocks dropped on Wednesday after a report said President-elect Donald Trump's transition team is looking at doing away with the EV tax credit.
According to a report from Reuters, Trump's transition team has drawn up plans to end the $7,500 consumer tax credit for electric vehicle sales as part of broader tax reform legislation.
Tesla stock dropped 5% to $312.20 a share following the report. Shares of Rivian plunged 12% to $10.57, and Lucid dropped 3% to $2.11 a share.
Ending the tax credit—a key measure included in Biden's 2022 Inflation Reduction Act—would likely hurt EV sales, but sources told Reuters that Tesla representatives supported ending the subsidy.
Tesla CEO Elon Musk has become a strong ally of Trump in recent months, supporting his campaign with sizable donations and spending time with him at his Mar-a-Lago residence.
Musk has said previously that while ending federal tax incentives for EV purchases would hurt Tesla sales, the move would be more damaging to Tesla's US EV competitors, including General Motors and Ford.
General Motors stock jumped about 1% on Wednesday, while Ford shares were about flat.
Reuters noted that the tax credit is likely an easy target. Other pieces of the Inflation Reduction Act could be hard to roll back, as the money for many programs has already been distributed. Eliminating the tax credit would likely garner wide support from Republicans and help offset the costs of future tax cuts.