A sledgehammer. A dismantling. A double gut-punch. Any way you want to describe a pair of actions by the U.S. Congress today, it doesn't look good for America's pathway to a cleaner-energy future.
As it seeks to pass President Donald Trump's agenda of tax cuts and dismantling the regulatory state, both houses of Congress voted on provisions that, taken together, could severely limit the growth of electric cars in America.
First, a bill passed by the U.S. House this morning moves to end the Inflation Reduction Act's tax credits for clean energy, including electric-vehicle tax credits. Then the U.S. Senate voted to end a so-called waiver that allows California to set its own emissions standards, which are followed by more than a dozen other states and sought to regulate all-electric new car sales by 2035.
The House vote was for Trump's "One, Big, Beautiful Bill," which would enact sweeping tax cuts and dramatically reduce federal spending. Those cuts end the $7,500 tax credits used to purchase or lease new EVs, although it provides an exception for cars from manufacturers that have not sold 200,000 EVs placed in service by the end of 2026.
It also ends tax credits for home refueling infrastructure, kills the $4,000 tax credit for used EVs and plug-in hybrids, and kills the tax credit that subsidized the production of solar energy components, wind energy components, battery components and inverters. The bill also makes it more expensive to own an EV, instituting a new "Car Tax" for EV and hybrid owners to the tune of $250 and $100, respectively.
Thus, not only will the bill remove incentives for buying EVs, it will make it more expensive to even own one.
Provisions of the House bill may be excluded as it heads to the Senate. However, EV and clean-energy advocates were quick to say that repealing the IRA's provisions at this level would effectively hand the future of power over to China, which is already significantly ahead on EVs, battery power and solar production.
Ben Prochazka, the executive director of the nonprofit Electrification Coalition, said that the House bill will also heavily impact jobs in the U.S. Clean-energy jobs, including in the EV and battery space, have largely been concentrated in red and purple states.
“The bill passed by the House this morning takes a sledgehammer to the U.S. EV industry and undermines efforts to build robust, secure and reliable access to critical minerals," Prochazka said. "Removing these credits would pull the rug out from under the auto industry and other industries related to EVs at a critical time, immediately putting American jobs at risk."
Albert Gore III, the executive director of the nonprofit Zero-Emission Transportation Association (ZETA), concurred in a similar statement.
"A vote to dismantle that now is not just a policy misstep but a signal that the United States is retreating from its goal to be competitive with China in the battery and mineral sector," Gore said. "If this bill is enacted into law as currently written, members of Congress should not be surprised when critical mineral mining and refining projects stall and billions in manufacturing investments evaporate in states that have worked hard to attract these jobs and economic opportunities."
There was much speculation as to how Republican members of Congress would vote on the bill, given how many of them have EV-related projects in their districts. Earlier this year, for example, Georgia Rep. Buddy Carter—whose district includes Hyundai's new electric and hybrid Metaplant—told InsideEVs that Congress should not take a "sledgehammer" to the IRA to avoid putting investments like that at risk.
But in the end, most Republicans got in line with Trump's agenda. The bill passed in a 215-214 vote, with only two Republicans—Reps. Thomas Massie (Kentucky) and Warren Davidson (Ohio)—in opposition.
However, Carter voted today with his colleagues to pass the bill. “This is a once-in-a-generation bill that will unlock President Trump’s full domestic agenda, which Georgians voted for overwhelmingly back in November," Carter said in a statement. "Will they stand with the people of Georgia by preventing the largest tax hike in American history, or will they bend the knee to Chuck Schumer by siding with the liberal elites?”
It's unclear what provisions, if any, the Senate could preserve when the goes its way for reconciliation.
Meanwhile, ending the California emissions waiver that dates back to the 1960s and 1970s will likely have a limiting effect on EV growth in the country's biggest new-car market, along with the states that follow its rules.
While automakers may well rue losing their EV tax credits, many of them have argued in favor of one national standard for emissions—and presumably an easier one to meet. Earlier this week, General Motors, an automaker more ahead on battery strategy than most, urged its white-collar employees to help push for an end to the California mandate.
John Bozzella, president and CEO of the Alliance for Automotive Innovation, celebrated the move today.
“The auto industry has invested billions in electrification and has 144 electrified models on the market right now. Again, the concerns were about the mandate—not the technology," Bozzella said in an email. "You can be against the EV mandates (we were) and believe that transportation is trending toward a range of electrified products like battery electric vehicles, hybrids and plug-in hybrids (it is)."
Additionally, the chief lobbying group for America's car dealers—a group that has traditionally resisted electric sales—applauded the move. "This unrealistic mandate, coupled with an insufficient and unreliable charging infrastructure, would have drastically reduced consumer choice and raised prices for new and used cars and trucks for all Americans,” the National Automobile Dealers Association (NADA) said in a statement.
U.S. EV sales hit a record 1.3 million in 2024, according to Cox Automotive. While both EV production and sales are expected to continue, removing the carrots and sticks—the incentives and penalties—to do so is likely to slow their growth. A recent report from the International Energy Agency now projects that EVs and plug-in hybrids will make up 20% of new-car sales in 2030, down from an estimated 55% in last year's report.
Nonetheless, this is a conscious policy decision by the current administration and its allies, and fears of China's EV and battery supremacy don't seem to enter into it. As Politico reported earlier this week, the GOP seemed divided with one side wanting to catch up to China on clean energy, and another side essentially saying China has already won that race and that America should stick to fossil-fuel power where it already dominates.
Now we know which side won out.
Contact the author: patrick.george@insideevs.com
