The federal electric vehicle (EV) tax credit, a key incentive for consumers to switch to eco-friendly cars, is facing an uncertain future as President Trump sets his sights on rolling back EV incentives. Despite the credit still being alive and kicking, Trump's administration is likely to eliminate it in the near future, dealing a significant blow to the auto industry and consumers alike.

The EV tax credit, which provides a $7,500 rebate for new EVs and $4,500 for used ones, was passed by Congress as part of the Inflation Reduction Act. While it can't be eliminated by executive order, Republican lawmakers have previously attempted to kill the credit, and with full control of Washington, they may finally succeed. The tax credit's fate hangs in the balance, with Congressional sluggishness and potential Republican pushback potentially delaying its elimination until the end of the year.

Trump's first-day executive order blitzkrieg provides a glimpse into his administration's plans for the auto industry. A proposed menu of spending offsets by House Republicans includes a new fee for EVs and the elimination of a tax credit loophole for leasing them. This move is seen as a reversal of Biden's multi-billion-dollar effort to reduce carbon emissions, which made EVs a centerpiece of his climate policy.

The auto industry is bracing for impact, with experts predicting that the elimination of EV incentives will make buying and owning an EV more expensive, ultimately affecting sales and the environment. Kathy Harris, director of clean vehicles at the Natural Resources Defense Council, notes that the regulations have provided significant benefits to the auto industry, consumers, and public health.

Automakers are pleading for stability, but Trump's threats to eliminate EV incentives may dampen sales, while his plan to impose 25% tariffs on Mexico and Canada could prove disastrous for global supply chains. The industry is already reeling from a post-COVID slump, with companies like Nissan, Volkswagen, and Stellantis struggling to stay afloat.

However, Trump may face resistance from his own party, with 18 Republicans warning that prematurely repealing energy tax credits would undermine private investments and stop ongoing development. The members represent states with high levels of clean energy investments as a result of the Inflation Reduction Act.

Legal challenges are also expected to arise once concrete policy actions on the EV tax credit, emissions rules, and manufacturing incentives take shape. The auto industry is holding its breath, wondering what the future holds for EV sales, mergers and acquisitions, and the overall health of the industry.

As the situation unfolds, one thing is certain: the fate of the EV tax credit and the auto industry hangs in the balance, with far-reaching implications for consumers, the environment, and the economy as a whole.