Trump Push Against EV Tax Breaks Puts Future of Industry at Risk

As the Trump Administration seeks to eliminate the federal electric vehicle (EV) tax credit, a new study warns of potentially dire consequences for U.S. manufacturing and the overall EV market.

Produced by the REPEAT Project at Princeton University, the analysis suggests that axing the $7,500 tax incentive could lead to a drastic 30% drop in EV sales by 2027 and nearly a 40% decline by 2030.

This change could reduce the expected EV market share from a projected 18% to just 13% by 2026, and from 40% to 24% by 2030, according to the study.

Drastic 30% drop in EV sales by 2027

Jesse D. Jenkins, the project leader and assistant professor at Princeton, emphasized that this is the first report to directly correlate the removal of the tax credit with potential repercussions for U.S. manufacturing jobs tied to EV production and battery manufacturing.

The elimination of the credit could result in the cancellation of 100% of planned U.S. EV assembly plant expansions and render 29% to 72% of the nation’s battery-manufacturing capacity redundant, leading to significant job losses.

Analysts have consistently viewed the tax credit as indispensable for sustaining growth in EV sales. In line with this, S&P Global Mobility predicted that U.S. EV sales could more than double by 2030.

However, the Trump Administration’s focus on dismantling this and other Biden-era policies—including charging infrastructure and emission standards—casts a shadow over these optimistic forecasts.

Furthermore, J.D. Power has predicted that the potential elimination of the tax credit will keep EV market share stagnant at 9.1% this year, although growth is expected to resume post-2023, aiming for a 26% market share by 2030. Notably, red states could face the most significant impacts from these policy changes, threatening not only the manufacturing landscape but also the jobs that depend on it.