President Donald Trump’s push to abolish the federal tax credit for electric vehicle purchases could sharply increase gasoline prices by pushing up costs in California’s carbon market, a new analysis shows.
With Trump’s Day 1 executive order targeting EV sales subsidies, congressional Republicans are working to eliminate the tax credit that provides up to $7,500 for buyers of some EVs.
Ending the credit could slow EV sales, causing an increase in California vehicle emissions instead of a decrease that is now expected based on accelerating EV sales, said Luke Sideropoulos, North American carbon market analyst at Veyt, a Norway-based firm that analyzes carbon prices.
An increase in vehicle emissions in California would drive up the demand — and price — for pollution allowances that fuel suppliers and other polluters buy if they cannot meet state emissions limits. Price and demand would further rise as California tightens its emissions limits each year.
