Congressional Republicans on Thursday effectively parked the electric vehicle on the side of the road and abandoned it as tool for American policy.
The moves were thorough and unambiguous. The Senate sank California’s effort to remove gasoline-powered cars from its roads within a decade, while the House in its budget reconciliation bill erased nearly every special treatment that Democrats created a few years ago to make EVs easier to buy or manufacture.
It could not be a starker turn from four years ago, when then-new President Joe Biden made EVs the centerpiece of his efforts to create jobs, fight climate change and combat China.
Reactions to Congress’ actions revealed how divisive federal support for EVs has become. Republicans see the government picking winners, while Democrats see a crucial nation-building tool — and both sides claim their approach is best for countering China’s rise.
Ben Prochazka, the executive director of the Electrification Coalition, a nonprofit that promotes EVs, said in a statement that the House’s bill “takes a sledgehammer to the U.S. EV industry and undermines efforts to build robust, secure and reliable access to critical minerals.”
Meanwhile, two oil and gas industry groups, the American Fuel and Petrochemical Manufacturers and the American Petroleum Institute, issued a joint statement calling the Senate’s vote “a victory for American consumers, manufacturers, and U.S. energy security.”
The Senate’s ending of the California clean-cars waiver also drew strong support from the auto industry, including parts makers and auto dealers. “Congress has safeguarded this important hub of innovation and American engineering prowess,” said the Specialty Equipment Market Association, which represents manufacturers of auto parts. It noted that a third of its members’ products are meant for internal-combustion engines.
While the GOP’s moves were decisive, they were not conclusive. The House’s giant bill faces a rewrite in the Senate, and the Senate’s killing of the waiver immediately drew a court challenge from California.
Nonetheless, the consequences could be profound for the trajectory of Americans’ EV adoption and of U.S. auto manufacturing. Observers of the EV market worry that Congress’ withdrawal of support at best discourages investment in EVs and at worst clears the field for China to further dominate advanced cars and their batteries.
“This market is less certain than it was a few days ago, and that’s going to be bad for investment,” said Nick Nigro, the founder of Atlas Public Policy, which studies EV trends.
The objectors cave
Ever since Trump returned to office with a united Republican Congress behind him, supporters of EVs have wondered: Could a small band of House Republicans buck their party and take a stand for the EV?
On Thursday, the answer came back with a resounding no.
Only two Republicans voted against the bill, which sought to removed virtually every stick and carrot to promote the electric vehicle, while adding a few penalties besides.
EV advocates had been hoping for a different outcome. The benefits of Biden’s policies, especially from the giant Inflation Reduction Act, spurred $208 billion of factory investment, the vast majority of it in Republican congressional districts.
Yet as the vote came in, it was clear that Republicans like Buddy Carter of Georgia, whose district includes Hyundai’s huge new EV plant outside Savannah, and Mark Amodei of Nevada, whose district encompasses a battery cluster around Reno, would not vote against the EV tax cuts, even though they threatened to do so last year.
Thursday “didn’t win the day for anyone to demonstrate that profile in courage,” said Nigro.
Other days are ahead: The Senate has members who are on the record in support of clean energy rules, including Lisa Murkowski (R-Alaska), Thom Tillis (R-N.C.) and Jerry Moran (R-Kan.).
What the House did
The House bill removed most of the incentives that Biden and a Democratic congress created in 2022 in the Inflation Reduction Act, while making the purchase of an EV more expensive than a comparable gasoline vehicle.
The actions are a reflection of the gulf between the Biden and Trump views of how to grow the U.S. auto industry. Biden focused on government incentives and regulations, while Trump has erected tariffs against foreign-made vehicles.
Biden’s approach was “more about manufacturing and trade policy, to get both domestic and foreign companies to build their supply chains in America,” said Loren McDonald, an analyst for Paren, an EV data consultancy.
Trump’s attitude is “the exact opposite,” McDonald added, “putting everyone in the penalty box with tariffs.”
The increase in price came in the form of a $250 fee to be assessed on an EV’s annual registration. Republicans say the fee is necessary to offset the fact that electric vehicles bypass gas stations and in doing so, don’t pay into the Highway Trust Fund, which is funded by taxes on sales of gasoline.
Hybrids would also pay a $100 fee, including milder hybrids that can’t plug into an electric socket.
The most well-known EV incentive, a $7,500 tax credit to buy a new EV, would sunset at the end of 2026, instead of 2032. Furthermore, the only vehicles that would be eligible are those from automakers that have not yet sold 200,000 EVs — a measure that would remove any car made by Tesla, General Motors and possibly Toyota, Nissan and Ford.
A $4,000 tax credit for buying a used EV also would go away by the end of this year, along with a $7,500 credit for businesses buying EVs as fleet vehicles.
Other sweeteners are less visible but key to the sprawling EV ecosystem. For example, one provision would end a tax credit that gives a substantial tax discount for homeowners and businesses that build charging stations. Another would end a program to fund electric heavy-duty trucks, and yet another halts billions of dollars that is underwriting a transition to electric goods movement at ports.
A modification to another part of the tax code, called 45x, might have immediate impacts on battery-makers and their suppliers, because it would drastically curtail their ability to use materials from China.
The House bill bars battery supplies from “foreign entities of concern,” a government classification of unsavory countries to trade with and that is designed to exclude China from benefiting from U.S. industry.
Republicans often criticize Biden’s EV policies for not fully slamming the door on Chinese inputs. The Inflation Reduction Act did close that door, but more slowly.
The Biden administration applied the limit by stepping down Chinese content over seven years and never cutting Chinese supply off completely. That was an acknowledgment of the fact that it is currently impossible to make a China-free battery.
China overwhelmingly controls the battery supply chain, from mines and chemical refineries to cathode materials and finished battery cells.
Senate wastes the waiver
Meanwhile, the Senate took the unprecedented step of tossing out a waiver that allowed California to set its own aggressive goals for EV adoption.
The 51-44 vote included all Republicans and one Democrat, Sen. Elissa Slotkin (D-Mich.). The House voted to overturn the waiver earlier this month.
The vote was especially controversial because the Senate brushed aside both its own parliamentarian and the Government Accountability Office, both of which said that the body did not have the authority to overturn the rule.
Shortly after the Senate’s vote on Thursday, California said it would sue to save its waiver.
EPA has granted more than 75 clean-vehicle waivers to California since the relevant law passed in 1967, according to a tally by the Natural Resources Defense Council.
This waiver, for a program known as Advanced Clean Cars II, is the first to be overturned, alongside two others that reduce pollution from diesel trucks.
The waiver would have required 35 percent EV sales as of next year, by each automaker, a number that no state including California was close to achieving.
It was the growing gap between tepid EV sales and the ambitious California mandate that led to strenuous opposition from groups like the National Automobile Dealers Association.
“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 group said.
This story also appears in Climatewire.
