EV advocates warn of Chinese dominance as a result of cuts to credits in the United States, writes Grant Schwab.
The cuts to Biden-era tax credits in the budget passed by the Republican-controlled US House of Representatives could stunt the growth of the nation’s still-fledgling electric vehicle industry and create ripple effects throughout the global vehicle market, clean energy advocates warn.
"Anybody who claims to be concerned about Chinese dominance in battery minerals and supportive of US competitiveness in that sector needs to know: This bill is absolutely devastating to that goal," Zero Emission Transportation Association executive director Albert Gore said.
The credits are meant to stoke both the domestic supply of critical minerals and advanced battery technologies and the demand for products that use those materials, namely next-gen, zero-emission vehicles.
Environment-minded conservatives argue that broader tax breaks — which would be less targeted towards EVs and critical minerals — and regulatory rollbacks are instead best for growing those industries, and that Democrats are wrong to catastrophise over the changes. But with significant policy whiplash looming, advocates said multibillion-dollar investments in key sectors could shrivel thanks to the harsh realities of competing with the United States’ chief economic rival.
They also predicted political consequences for Republicans if the Senate follows suit and President Donald Trump, who has been critical of non-Tesla electric vehicles, signs a rollback into law.
"The plan passed by House leadership will make it harder to produce the energy America needs, while simultaneously putting hundreds of projects, thousands of jobs and billions in investments at risk — mostly in Republican states that elected them," Bob Keefe, executive director of E2, a nonpartisan business group focused on energy and the environment, said in a statement.
Even with those risks, House Republicans voted to pull back on EV-related credits in their tax and spending mega bill that passed along party lines on May 22 after all-night negotiations.
The final version of the package seeks to eliminate four tax credits for EVs by the end of 2025 and modify another on manufacturing that industry leaders have said is crucial to building domestic battery prowess.
The EV credits include offering $7500 on the purchase of qualifying new light-duty models, $4000 for used models, providing up to $40,000 for commercial vehicles and giving $1000 to individuals to install EV chargers.
A manufacturing credit targets battery producers and upstream industries. Battery cells are each eligible for a credit of $35 per kilowatt-hour of energy they can store. Critical mineral miners, processors, purifiers and recyclers can claim a credit equal to 10% of their production costs.
The bill proposes phasing out that credit a year earlier than initially planned and adding new requirements against the use of materials from certain foreign nations.
"The production credit is critical for our industry, and it will be a significant impact for our industry if it goes away," Ford chief executive Jim Farley said at the Detroit Auto Show in January.
"Many of our plants in the Midwest that have converted to EVs depend on the production credit". — TNS
