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For months, House Republican leaders have been crafting a new spending bill that aims to deliver on President Trump’s legislative agenda. Last week, the Ways and Means Committee and the Energy and Commerce Committee passed text for the reconciliation bill that could significantly hinder electric vehicle (EV) uptake.
Ways and Means Committee
Text approved by the Ways and Means Committee last Monday proposes changes to the Inflation Reduction Act’s (IRA) clean energy tax credits, as outlined in the table below.
Table 1: Proposed budget changes to EV tax credits
|
Section |
Credit Name |
Phase out Date |
Key Notes from the Text |
|
25E |
Previously-Owned Clean Vehicle Credit (Used EV Credit) |
Ends for vehicles acquired after 12/31/2025 |
Terminates 6 years earlier than IRA schedule |
|
30D |
New Clean Vehicle Credit (Consumer EV Credit) |
Ends for vehicles placed in service after 12/31/2026 |
Revives a pre-IRA manufacturer cap; if a manufacturer delivered |
|
45W |
Qualified Commercial Clean Vehicle Credit |
Ends for vehicles acquired after 12/31/2025 |
Legacied if under binding contract signed before 5/12/2025 and placed in service by 12/31/2032 |
|
30C |
Alternative-Fuel Refueling Property Credit (EV chargers) |
Ends for property placed in service after 12/31/2025 |
Credit to be sunset early: End date of 12/31/2032 amended to 12/31/2025 |
|
45X |
Advanced Manufacturing Production Credit |
Phases out to 0% for all components after 12/31/2031; wind components end after 12/31/2027 |
Disallows the credit if a component or taxpayer has ≥ 10% foreign entity ownership / ≥ 5% payments to a “prohibited foreign entity,” potentially blocking most China-linked supply chains.
|
Rhodium Group released analysis which pointed to the “imposition of highly restrictive and administratively complex (and potentially unworkable) limits on sourcing of components, subcomponents, and critical materials used at a facility” as a “de facto sunsetting” of the Clean Energy and Advanced Manufacturing Production credits. They also highlighted the “repeal of the transferability, which reduces options for monetizing the credits, and implementation of foreign sourcing limits for a host of…credits.”
The tax credits are designed to complement each other. The 45X credit incentivizes manufacturers to expand domestic production, while demand-side credits (25E for used EVs, 30C for charging infrastructure, and 45W for electric commercial vehicles) help build strong markets for EVs and U.S.-made batteries and critical minerals.
Manufacturing credits have attracted domestic investment. Between 2009 and 2024, companies committed $224 billion and announced 243,000 jobs across 557 EV, battery, and critical minerals facilities in the United States. The Congressional districts with the highest announced investments are mostly represented by Republicans and companies like Ford have credited federal tax credits as a key driver behind their investments.
Demand credits with domestic sourcing requirements have played a role in shaping the recent U.S. EV manufacturing landscape. A total of $61.9 billion in announced investments and 91,900 jobs are directly tied to facilities that currently or intend to manufacture vehicles or batteries qualifying for 30D. For tax year 2023, there were 487,990 30D tax credits claimed in the U.S. and, in a survey conducted by JD Power in 2024, more than half of battery EV buyers indicated that the tax credit influenced their decision. However, as currently written, the budget bill text would end 30D for vehicles placed in service after December 31, 2026 and would reinstate a cap limiting eligibility to the first 200,000 “plug-in electric vehicles” sold by each manufacturer (including plug-in hybrids). This would disqualify manufacturers of roughly 90 percent of EVs currently on the road, leaving only 17 automakers eligible.¹
Energy and Commerce Committee
The Energy and Commerce Committee is also seeking to repeal clean energy programs and rescind unobligated funds. Several of these programs are pertinent to EVs, including the Clean Heavy-Duty Vehicles Program, Diesel Emissions Reduction Grants, Clean Ports Program, and Vehicle Efficiency and Emission Standards. This follows the Trump administration’s move to pause funding for the National Electric Vehicle Infrastructure and Charging and Fueling Infrastructure programs as part of Trump’s Unleashing American Energy Executive Order.
Looking Ahead
The text released last week from these two committees is likely to undergo changes, but the first drafts would significantly undermine EV uptake and the build out of a domestic supply chain. Rolling back federal incentives that support manufacturing growth and jobs risks ceding ground to global competitors like China and Europe, who continue to invest heavily in clean transportation.
¹Atlas aggregated new registration data for all light-duty EVs (GVWR ≤ Class 2b) registered in the United States through February 2025, from the EV Hub Market Dashboard. Sales for every brand were rolled up to their common-control parent (per § 30D(e)(4) controlled-group rules), and any parent with ≥ 200 000 cumulative units was tagged “phase-out.” These figures are preliminary and have not yet appeared in an Atlas public brief or digest.
