Are Tesla Subsidies In Trouble With The Trump Administration

By Martin Feigen | Nov 17, 2016

Photo by Neil Godwin/T3 Magazine via Getty Images) /

With Donald Trump stating he wants a big infrastructure plan, could the Tesla subsidies be in trouble?

One of the quiet issues surrounding electric cars is our tax policy for road construction and maintenance. Electric cars have for the most part been exempt from those taxes since they are collected on fuel sales. The more of the EV’s hit the road the bigger this issue has become. That coupled with cars, in general, getting significantly better fuel mileage, tax revenues for transportation have fallen.

With the election of Donald Trump, things are about to change. Infrastructure spending on roads and bridges appears to be on the verge a huge boost. One of the revenue streams that could be tapped to pay for the projects is the subsidies for electric vehicles and their makers. There have even been rumblings of a federal usage tax placed on EV’s to make up for lost revenue as well.

States all around the country have been trying to find ways of making up the tax revenue lost to greater fuel economy and electric vehicles. The fuel tax is essentially a usage tax that was created in an entirely different world. The greater the numbers of alternative fuel and hybrid cars, the fewer tax dollars there are for road building and maintenance.

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Tesla founder Elon Musk was a vocal critic of President-Elect Donald Trump. They have vastly differing views of climate change. Trump has openly criticized government monies to EV makers. A Trump administration is very likely to take a hard look at federal subsidies to these companies. Tesla, like most automakers, receives several subsites along with owners.

There is no doubt that subsidies for buyers and makers of EV’s have helped spur development and acceptance of the technology. Is the industry on strong enough footing to make it without assistance? That is the big question. We are very likely about to find out how strong a footing the EV industry actually is.

One of the options to make up tax revenue is a mileage usage tax. That is an idea floating around states nationwide. It involves data transfer from the vehicle. The privacy and security concerns that come with that have been keeping those efforts at bay. The only way a mileage usage tax would be accepted is with the elimination of gas taxes. With federal, state, and local taxes, that is also very unlikely.

While Tesla is not the only car builder that could be affected by the elimination of subsidies, their entire fleet is dependant on them on both ends. If the squeeze is put on both buyers and Tesla itself, questions on the future of the company are being raised. Add the elimination of assistance the government gave the recently purchased Solar City, Tesla could be facing a much more difficult future.

Will the increased cost to owners of EV’s with some sort of usage tax coupled with increased unit cost without subsidy, hurt sales? It has to be a major concern to everyone involved in the industry. The development and advancement of electric and hybrid cars have helped greatly reduced pollution here in the USA.

The very high resale prices of Tesla’s have helped drive new car sales. Increased usage costs due to a new mileage tax will affect resale value of the popular electric vehicles. It is a future that does have some on wall street concerned. The stock price for Tesla has been under pressure since the Solar City purchase announcement, has continued its slide since the election. It has now dropped 18% since then.

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I hate to see such an innovative company as Tesla have its future so affected by a political action. What would be the best outcome is to see the industry realize it can survive on its own. Then all the detractors that believe that the EV industry as a whole is artificially surviving would eat some crow. For now, Tesla and owners of EV’s have to be holding their breath as to what is coming from the EPA and DOT once the new president is sworn in.