In an interview with Reuters, Republican Presidential candidate Donald Trump revealed that he might consider abolishing the $7,500 tax credits for electric vehicles (EVs) and could also contemplate appointing Tesla’s (TSLA) CEO, Elon Musk, to a cabinet or advisory role.
Bonhomie Between Trump and Musk
Trump described Musk as “a very smart and brilliant guy,” suggesting he might appoint him to an advisory position. This marks a notable shift in Trump’s stance, as Musk had previously suggested Trump should retire.
Recently, however, Musk has warmed to Trump and endorsed his campaign for the White House. This change comes despite Trump’s earlier criticisms of all-electric trucks and semis, as well as his opposition to certain EV subsidies benefiting Tesla.
Trump’s Views on EVs, Tax Credits and More
During the interview with Reuters, Trump commented on tax incentives, stating, “Tax credits and tax incentives are not generally a very good thing,” particularly targeting the EV credit. He further explained that if elected, he would either reverse the Treasury Department’s rules that support the $7,500 EV credit or push Congress to repeal it.
Furthermore, Trump stated that although he was a fan of electric cars, he also supported gasoline and hybrid vehicles and saw a smaller market for EVs due to cost and battery range issues.
Additionally, Trump expressed his support for a variety of vehicles, including gasoline and hybrids, citing concerns over the cost and battery range of EVs. He also voiced plans to impose tariffs on vehicles imported from Mexico and prevent Chinese automakers from establishing plants in Mexico for U.S. sales, while welcoming foreign automakers to build manufacturing plants in the U.S. Trump emphasized, “We will make our own cars. I want to make our own cars.”
Impact on TSLA
Tesla did not immediately comment on Trump’s views. However, if he were to withdraw EV tax credits as President, it could further affect the company’s sales in the United States. Tesla’s U.S. sales have already slowed significantly due to rising competition, and its aging EV lineup has led many customers to switch to newer models.
According to market research firm Cox Automotive, Tesla’s U.S. sales declined by 6.3% year-over-year in the second quarter, totaling 164,000 cars.
What Is the Prediction for Tesla Stock?
Analysts remain sidelined about TSLA stock, with a Hold consensus rating based on 10 Buys, 14 Holds, and seven Sells. Year-to-date, TSLA has declined by more than 10%, and the average TSLA price target of $211.46 implies a downside potential of 5.1% from current levels.
