War on Electric Cars and Better Fuel Efficiency Heating Up
Congressional Republicans have proposed killing federal EV credits, a move that could easily pass the GOP-dominated House. It likely would clear the Senate as well, although Republican’s hold a much slimmer majority in the upper chamber.
The measure is slated to be heard today – May 13 – by the House Ways and Means Committee, which typically must approve tax-related legislation before it goes to the floor for a final vote.
House Republicans also are proposing that federal fuel efficiency targets for automakers’ internal combustion vehicles – the so-called CAFE standards – for 2027 and beyond be rescinded. That would support both an executive order issued by President Trump just hours after he was sworn in on Jan. 20 and a Jan. 28 order by Trump’s then newly confirmed Transportation Secretary, Sean Duffy.
The anti-EV tax credits proposal would end both the EV tax credits for new vehicles – a total of up to $7,500 – and the $4,000 credit for used EVs. Both credits would end on Dec. 31 except for automakers that have not yet sold 200,000 qualifying electric and plug-in hybrid models. They would get another year or credit eligibility, through 2026.
EV credits worth more than $2 billion were issued in 2024.
Republicans are leaving untouched for now an EV battery production tax credit for automakers and battery makers, but are pressing for new provision that would eliminate the credit for vehicles produced with components made by some Chinese companies or under a license agreement with Chinese firms. The proposal would take effect in 2027 if it becomes law and could bar credits for cars with batteries built using Chinese battery technology licensed by American companies such as Ford Motor and Tesla.
Ford CEO Jim Farley recently said in an interview with the New York Times that Chinese battery companies are a decade ahead of U.S. automakers and that Ford needs to license their technology to remain competitive globally.
In yet another attack on federal support for clean vehicles, the House GOP separately is seeking to kill a loan program that supports the manufacture of certain advanced technology vehicles.
That proposal would rescind any funding in the program not already obligated and undo already-approved corporate average fuel economy (CAFE) standards and greenhouse gas emission rules for 2027 and beyond.
The loan program and EV tax credits all were approved by Congress during the Biden Administration as part of the Inflation Reduction Act of 2022.