The future of electric vehicle (EV) tax credits hangs in the balance as negotiations on Capitol Hill continue. The House-passed bill includes significant cuts to the incentives, which could drastically affect consumer spending and industry growth.
Under the bill, new car buyers would only be eligible for a $7,500 tax credit for EVs produced by automakers that have sold fewer than 200,000 units, phasing it out after 2026. Meanwhile, the used vehicle credit, worth up to $4,000, would expire at the end of 2025.
However, companies like Tesla and Ford are concerned about the impact on job growth and investment in EV manufacturing. The tax credits have incentivized billions of dollars’ worth of new projects, mostly in Republican-leaning districts.
Industry experts argue that pulling subsidies could exacerbate the vehicle affordability problem and put manufacturing investments at risk. “It’s easier to say goodbye to a stick than a carrot,” says Levi McAllister, a partner at Morgan Lewis.
While some advocacy groups hope senators will preserve at least some of the clean energy credits to bolster US jobs, most experts believe companies will continue to invest in EVs despite potential cuts to incentives. The rest of the world is moving towards electric vehicles, and American automakers face pressure to stay competitive.
If passed, the bill could slow the timeline for factory expansions and hinder progress toward cutting transportation-related emissions. However, companies have already started investing in EVs before the IRA was passed, and they are likely to continue doing so, driven by a growing market demand and the need to stay ahead of global competitors.
Source: https://www.npr.org/2025/06/03/nx-s1-5414604/ev-tax-credits-republican-bill