An electric vehicle (EV) advocacy group has urged the US House of Representatives to amend a Senate-approved bill that would eliminate federal tax credits for EV purchases.

The legislation, passed recently by the Senate, would end the US$7,500 credit for new EVs and the US$4,000 credit for used EVs starting September 30, 2025.

The Electrification Coalition and Calstart warned that removing the credits could harm US manufacturing and job growth while benefiting China.

The Alliance for Automobile Manufacturers, representing companies such as General Motors, Ford, Toyota, and Volkswagen, supported certain provisions in the bill that revise a battery production tax credit.

The revised language excludes Chinese companies from eligibility and seeks to maintain auto-related manufacturing in the US.

Ford raised concerns over the bill’s impact on its US$3 billion battery plant in Michigan, which is 60% built and expected to generate 1,700 jobs.

The bill also proposes lifting penalties for missing fuel economy standards, which could benefit gas vehicle makers like Stellantis and GM.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ EV incentives significantly impact adoption rates and market growth

Global electric vehicle sales rose by over 25% in 2024, exceeding 17 million units, with EVs comprising nearly 20% of total car sales worldwide 1.

In the U.S., a record 1.3 million EVs were sold in 2024, marking a 7.3% increase year-over-year and outperforming the 2% growth in gasoline vehicle sales 2.

Princeton University research suggests that eliminating EV tax credits could result in a 40% decrease in EV sales by 2030, equating to approximately 8.3 million fewer electric vehicles on American roads 3.

The proposed early termination of incentives comes at a critical juncture when many automakers have committed billions to EV manufacturing but haven’t yet achieved price parity with conventional vehicles.

Government incentives have proven highly effective in countries leading EV adoption, with Norway achieving 60% EV market share through comprehensive tax breaks and other benefits 4.

2️⃣ Manufacturing investments and domestic jobs hang in the balance