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Electric vehicle (EV) buyers could face sticker shock if the EV tax credit gets repealed. J.D. Power executive director of EV practice Brent Gruber joins Asking for a Trend to explain how the new tariffs and potential loss of incentives could hit EV prices and demand.
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So it sounds like we could be saying goodbye here to that EV tax credit, Brent. If we did, walk us through what you think the ripple effects, the implications would be for EV sales for EV adoption.
Yeah, if that does in fact happen, Josh, you know, you're potentially looking at a double whammy with tariffs and the elimination of the tax credit. You're talking about, you know, what is conceivably a $12,000 plus swing on the price of an electric vehicle. Um, you know, certainly electric vehicle shoppers are price conscious. We've seen some impact on price fluctuations over the last couple years, particularly when there are incentives and pricing actions taken on the sales of electric vehicles. It generates a lot of interest. So if those tax credits go away, you're going to see probably a slow down in the level of interest for electric vehicles.
And how, Brent, would you see that potentially impacting impacting impacting the the automakers? I'm thinking GM and Ford, and just sort of their broader EV ambitions, Brent?
Well, at JD Power, we have this saying that we say, you know, one in, one out, and two in the middle. And what that means is out of every four shoppers in the United States new vehicle shoppers, one of those four is very much interested in an electric vehicle and will highly likely consider purchasing one. And then one of those shoppers is highly likely to not purchase one. Then there's those two in the middle where I think you'll see some movement with those folks in the middle who are maybe on the fence, you know, thinking about purchasing an electric vehicle. You know, there's a market among the consumers who are very set on buying an electric vehicle, but it's really going to affect those people in the middle who may be on the fence. And that's a very large percentage of the buyer population.
Well, I'm also curious, Brent, to get your take on how you think it could impact, if at all, Tesla. I'm curious whether you think Elon Musk is maybe in some sense better positioned there, Brent. Does he have kind of more financial flexibility to lower prices if he had to?
Well, I can tell you from a data perspective and what we see at JD Power, I think that Tesla is very susceptible to the elimination of the tax credits, just as other manufacturers are as well. One of the things that we do with our study is we track the influence of those tax credits on purchase decisions. And when you look at the brands that are most affected by those purchase prices and the tax credit, Tesla's right up there at the top. So I think that they're very susceptible to the elimination of those. Now, whether or not they have some pricing power to be able to offset some of that, I think that remains to be seen. But from a consumer perspective, you know, Tesla consumers are very much utilizing those tax credits.
