Trump Administration Puts Brakes On EV Tax Credits: What To Know In RI

RHODE ISLAND — The Trump administration is slamming the brakes on nearly all federal support for electric vehicles just as the industry is picking up speed in Rhode Island.

President Donald Trump issued an executive order, “Unleashing American Energy,” on his first day in office that revokes a nonbinding goal set by the Biden administration that EVs make up half of new cars sold by 2030.

There was no federal mandate to force the purchase of EVs, but car companies shifted production from gas-powered vehicles to electric cars. The order also halted billions in dollars in funding for charging stations and battery manufacturing plants.

The executive order didn’t immediately affect the availability of tax credits. That would require an act of the Republican-controlled Congress, which is eager to find money to pay for the tax cuts Trump has promised and ending the $7,500 and $4,000 credits, respectively, for new and used EV purchases could help with that.

Eliminating the incentives would cut 2026-35 fiscal costs by $168.5 billion; eliminating all the policies saves a total of $172.7 billion, according to a Harvard analysis.
Below are more things Rhode Island residents need to know.

What Happens To Rhode Island Incentives?

The clean car rollback doesn’t end incentives in Rhode Island.

Rhode Island used a portion of its Volkswagen Environmental Mitigation Settlement funds to support its Electrify Rhode Island program. Although that finding has run out, there is still some money available for charging projects.

Also, vehicles powered exclusively by electricity are exempt from state emissions inspections, but are still required to pass a safety inspection.

Policymakers in most states have approved incentives to shift the transportation industry away from gas-powered vehicles, the leading source of greenhouse gas emissions, to electric vehicles, plug-in hybrids, and battery electric vehicles, according to the National Conference of State Legislatures.

Has EV Ownership Grown In Rhode Island?

Overall, Americans registered about 3,555,900 EVs in 2023, up from 2,442,300 the year before and 1,454,400 in 2021, according to data from the U.S. Department of Energy’s Alternative Fuels Data Center.

In Rhode Island, about 6,400 electric vehicles were registered in 2023, compared with 4,300 in 2022 and 2,500 in 2021.

What Would Legislation Do?

Two pieces of Republican-sponsored legislation take aim at the Biden era policy.

In February, Sen. John Barrasso (R-Wyoming) proposed the Eliminating Lavish Incentives to Electric (ELITE) Vehicles Act, which would repeal tax credits for EV purchases of $7,500 for new vehicles and $4,000 for used vehicles; eliminate federal incentives for EV charging infrastructure; and close the “leasing loophole” that allowed certain taxpayers and foreign entities to evade restrictions on EV incentives

“Repealing these reckless tax credits from the Biden administration once and for all will stop Washington from giving handouts to our adversaries and high-income individuals. Wyoming families should not foot the bill for expensive electric cars they don’t want and can’t afford,” Barrasso said in a statement about the bill.

At the same time, Sen. Deb. Fischer (R-Nebraska) reintroduced the Fair SHARE Act, which would impose a new $1,000 fee on EV purchases at the point of sale that would match the federal fuel taxes paid by gasoline-powered vehicle owners over 10 years.

“EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges,” Fischer said in a statement. “It’s only fair that they pay into the Highway Trust Fund just like other cars do.”

What Do Experts Say?

Proponents of the rollback say that if EVs are superior and cost-effective, they should be able to compete without subsidies, Kiplinger reported. A market free of government intervention provides a better read on public perception of EVs, they say

On the other hand, some energy policy and auto industry experts worry the Trump administration policies could trigger a wave of factory shutdowns, cancel investments and lead to higher planet-warming emissions.

“Everything that’s happening politically couldn’t have happened at a worse time from the point of view of EV adoption,” Ed Kim, president and chief analyst at the car market research firm AutoPacific, told The Washington Post.

Analysts say the end of federal tax credits will delay but not entirely eliminate the shift to environmentally friendly vehicles.

Gil Tal, director of the Electric Vehicle Research Center at the University of California at Davis, told The Post that EV sales will likely continue “because of the huge investment done in the last couple of years.”

“But it’s not going to be an S-curve in any way,” Tal said.

The Harvard analysis said ending the EV tax would both reduce EV adoption and drive up carbon emissions “more than any other single policy change.”

It’s likely to cut the EV share of new vehicle sales in the target 2030 year by 6 percentage points from the Biden policy baseline of 48 percent to 42 percent, according to the analysis. Further, cutting the $5 billion National Electric Vehicle Infrastructure, or NEVI, program for charging stations would cut new vehicle sales by 3.2 percentage points.

The researchers said eliminating the EV tax credits would increase 2030 emissions by 20.3 million metric tons versus the 2030 baseline forecast; eliminating all the policies raises emissions by a total of 44.1 million metric tons.

Jessica Caldwell, head of insights at car shopping and review website Edmunds, said incentives are needed to jump-start the EV industry. Buyers at the beginning of the EV revolution who bought luxury models might be willing to pay higher prices, she told The Washington Post, but added, “The second wave of buyers needs more convincing.”

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