Source: Clean Economy Tracker
Earlier this month, my colleagues and I published analysis on the impact of the Advanced Manufacturing Production Tax Credit (45X) on domestic clean energy manufacturing using data from the Clean Economy Tracker. This tax credit, established under the Inflation Reduction Act, was designed to support domestic production of components used in clean energy technologies, including batteries, solar panels, wind turbine parts, inverters, and critical minerals. By incentivizing domestic production, the credit is helping the U.S. bridge the gap with foreign leaders in these technologies, while generating substantial job creation and private investment.
The tax credit appears to be on the verge of significant revisions by Congress. Yesterday, the Senate Finance Committee released its text for inclusion in the reconciliation bill (known as the One, Big Beautiful Bill). This text, like the House version, would phase out several clean energy and electric vehicle (EV) tax credits. This includes new rules on 45X as well as cutting other key EV tax credits such as 45W, 30D, 30C, and 25E. Key questions remain, including whether the Senate will adopt the House’s proposed annual fees of $250 for EVs and $100 for hybrids, how to operationalize foreign sourcing requirements, and the final timeline for phasing out certain tax credits.
So, what do you need to know about the tax credit and what’s at stake?
First, companies have announced $186 billion in manufacturing investments. This includes $48.3 billion at currently operating facilities already manufacturing 45X eligible components, creating an estimated 62,700 jobs across 37 states. Much of this investment ($38.4 billion) supports battery and mineral production, which is vital to the electric vehicle (EV) supply chain.
Companies have also announced $137.2 billion for projects that are planned or under construction, along with 103,100 expected jobs. Batteries and minerals once again make up the bulk of this investment ($124.9 billion), demonstrating the size and potential of the EV and battery supply chain.
Second, these investments are highly concentrated in Republican-held House districts (77 percent of all investments). The Congressional district with the most announced investment is North Carolina’s 9th, represented by Republican Richard Hudson. This district alone has seen nearly $14 billion in 45X eligible announced investments. Toyota, for example, operates a battery manufacturing facility in this district that received an initial investment of $5.9 billion and 2,100 jobs. Toyota then announced plans to expand this facility with an additional $8 billion investment, further cementing the district’s role as a hub for battery manufacturing.
In a separate analysis on how industry is talking about federal clean energy incentives, including 45X, my colleagues and I reviewed annual public filings—known as 10-K filings—with the Securities and Exchange Commission from 40 companies that have announced at least $100 million in U.S. clean energy manufacturing investments. Together, these companies have committed over $80 billion in manufacturing investments in the U.S. and, across the board, they are clear on the value of federal tax credits and incentives not only for their businesses but also for national energy security, consumer costs, and job growth. Overall, these companies contend that:
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Domestic clean energy production reduces supply chain risks. For example, Stardust Power, a lithium producer that has announced $1.2 billion in investments in Oklahoma’s 2nd Congressional District, noted that, “[t]he United States lithium refining sector is seeing increased activity, partly driven by government policies such as the Inflation Reduction Act, which incentivizes domestic production. New players like Stardust Power are entering the market, positioning themselves through strategic initiatives such as mergers and joint ventures to fund their development.”
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Federal tax credits are a primary driver of U.S. manufacturing investment. Ford, for example, has announced $12.5 billion in manufacturing investments in the U.S. The company stated that federal support “incentivizes companies to engage in a wide range of activities primarily focused on clean energy investments and domestic manufacturing.” Similarly, General Motors with nearly $17 billion in announced domestic investments noted ways in which incentives “encourage us to establish, maintain, or increase investment, employment or production in the region.”
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Rolling back these incentives could significantly disrupt ongoing investment and business operations. Rivian which has announced nearly $11 billion in investments in the U.S stated “Future federal and state administrations could introduce additional uncertainty for the EV industry. For instance, the new United States presidential administration has issued executive orders and could implement additional policies or modify regulations that could negatively impact the expansion of the EV market, such as by rescinding or modifying the 30D, 45W, 45X, 48C, or NEV tax credits, and could take further actions to diminish incentives for the production and purchase of EVs.”
If Congress eliminates or significantly alters 45X or other federal incentives, it will disrupt the growing momentum of U.S. manufacturing. Making these credits inaccessible or less effective would not only undermine investor confidence but also risk ceding leadership in clean energy production to China and Europe.
Read the analyses here:
The Advanced Manufacturing Tax Credit is Rebuilding U.S. Manufacturing
Tracing Industry Support for Energy Tax Credits Through SEC Filings
