The impact of the Trump administration's plan to abolish EV tax deductions on the USA's EV promotion policy 🤔

Following reports that President-elect Donald Trump and his transition team are planning to eliminate the $7,500 tax credit for electric vehicles (EVs), stock prices of EV manufacturers such as Tesla and Rivian plunged. In particular, Rivian's stock price saw a significant drop of over 14%, while Lucid also fell by 5%.
Due to Tesla's lower dependency on tax deductions compared to its competitors, the impact is relatively limited. However, other major manufacturers such as Ford and General Motors are considering shifting towards producing profitable gasoline vehicles. The impact of abolishing tax deductions on EV development plans in the United States is of particular interest.

The Trump administration's announced plan to abolish the $7,500 EV tax deduction is expected to have a broad impact on the overall EV market. For Tesla, the reduction of tax deductions raises concerns about long-term profit decline, but since the company has low dependency, the impact is considered limited compared to other manufacturers. Wedbush Securities analyst views Tesla as maintaining a competitive advantage even without subsidies due to its longstanding earnings performance.
On the other hand, for major US auto manufacturers like Ford and General Motors, the abolition of subsidies could potentially dampen the momentum of EV development. The tax deductions previously promoted by the US government were important incentives for each manufacturer to invest in high-cost EV technology. However, the loss of these incentives could lead to changes in the competitive environment of the EV market. It has been suggested that traditional auto manufacturers with high profits from gasoline vehicle production may prioritize profitability and reallocate resources to the development of gasoline vehicles.

Elon Musk, CEO of Tesla, expressing support for the intentions of the Trump administration is a significant move. According to Reuters, Tesla has shown a supportive stance towards the abolition of tax deductions, which has caused a kind of ripple in the market. Tesla, with a larger market size compared to its competitors, is believed to have established a revenue structure that does not depend on government subsidies. This confidence could be boosting Tesla's strategic decision-making.
However, Musk's move could create a challenging market environment for other EV manufacturers. For emerging companies like Rivian and Lucid, tax deductions serve as a means to attract new investments and offset high costs. Tesla's support for the abolition of subsidies may be seen as a strategy to maintain its competitive advantage. While Musk's cooperation with the Trump administration is seen as a move that looks at the overall landscape of the EV market, it will pose tough challenges for other companies.

The abolition of tax deductions may affect the US EV promotion policies themselves. The tax deductions for EVs implemented by the government so far have supported EV adoption in the US and contributed to reducing greenhouse gas emissions and improving energy self-sufficiency. While the policies of the Trump administration may lead to short-term cost reductions for companies, there are concerns about the long-term ecological impacts.
In particular, if the current tax deduction policies are abolished, the cost competitiveness of EVs may decline and the speed of market expansion could slow down. Reduction of subsidies could also directly lead to reduced consumer purchase intent, potentially slowing down the growth of the EV market. With reduced government support, the US may risk reverting back to a market centered around gasoline vehicles, so future developments will be closely monitored.