Stock prices of major car companies have declined as tougher rules limit access to electric vehicle tax credits. According to a report by Bloomberg, Stellantis' and Volkswagen's stock prices dropped after some of their plug-in vehicles lost access to U.S. electric car subsidies.
What's happening?
New classifications have impacted which EVs qualify for tax credits in the U.S. According to the most recent listings from the Department of Energy and the Environmental Protection Agency, VW's ID.4 electric crossover no longer qualifies for the full $7,500 tax credit.
Other models have also been impacted by the updates. Certain models from Nissan Motor Co. and Stellantis that previously received up to $3,750 are now no longer on the qualifying list.
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The updates impacted the companies' stock prices in early January, according to Bloomberg. In Milan, Stellantis shares fell as much as 3.8%, while VW's stock prices declined as much as 1.4% in Frankfurt, Germany.
Why are changing EV rules and declining stock prices important?
Tax credits incentivize Americans to purchase electric vehicles. More EVs on the road means fewer harmful pollutants in the atmosphere and more money in the pockets of EV drivers, who can save $1,500 annually on gas and maintenance. However, the new classifications limit which EVs qualify for those tax benefits.
The number of EVs and plug-in hybrids that qualify for a credit is down from last year. While 22 vehicles qualified last year, only 18 were on the list by early January, Bloomberg reported.
Though the manufacturing process of EVs generates pollution, once the car hits the road, it has zero tailpipe emissions. What's more, when compared to the lifespan of gas-powered vehicles, EVs have a significantly smaller impact on the environment.
What's being done about reduced pro-EV initiatives?
Despite these policy changes, there are still affordable EV options on the market. EV manufacturers have made cost-effective advancements in the industry, reducing the price for consumers.
It's still important to note, however, that the future of pro-EV initiatives remains unclear after the inauguration of President Donald Trump.
Trump "has made rescinding [Joe] Biden's pro-EV initiatives a key plank of his economic platform and has threatened tariffs on foreign-made cars," Bloomberg wrote.
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