House Republicans advanced an effort to void the Biden administration’s EV tax credits, even as electric vehicle sales in the US continued to grow year over year.
The House Ways and Means Committee voted in favor of a bill that would undo the federal EV tax credits, arguing that the rules would result in US taxpayer dollars flowing to Chinese companies. The tax credits were “pushed by radical environmentalists and some EV producers” and should therefore be struck down, according to a House Republican fact sheet.
“The Biden administration is sacrificing our economic independence in order to force more Americans to drive an electric vehicle,” Rep. Jason Smith (R-MO), the committee’s chair, said during a markup of the bill (H.J. Res. 148) on Tuesday. If Biden follows through on a promise to veto the legislation, “he is leaving the door wide open to making the American taxpayer China’s piggy bank,” Smith added.
“The Biden administration is sacrificing our economic independence in order to force more Americans to drive an electric vehicle.”
The bill was the latest effort by Republicans to reverse one of President Joe Biden’s central provisions passed as part of the Inflation Reduction Act of 2022, which makes available up to $7,500 in tax credits for the purchase of a new EV. The Republican-controlled House passed two other bills earlier this year aimed at scrapping the EV tax credits, neither of which have been taken up by the Senate.
The legislation mirrors the rhetoric of former President Donald Trump, who has promised to slam the brakes on the Biden administration’s policies to encourage EV sales. On the campaign trail, Trump has falsely claimed that EVs don’t work, even while correctly noting that plug-in cars are often more expensive than gas-powered ones. (But even that line has quickly become obsolete.)
No matter that Republicans are trying to roll back Biden’s tax credits at a time when more Americans are buying EVs than ever before. Despite some slowdown in growth earlier this year, automakers have been reporting increases in EV sales this year. EV production and deliveries are also up in the second quarter, with GM, Rivian, Lucid, and Toyota reporting upbeat figures. Even Tesla, which has been struggling with demand for months, reported a smaller-than-expected decrease in deliveries.
The Biden administration claims that the tax credits have been successful, saving car buyers $1 billion in 2024 alone. The credit was recently updated to be applied at the point-of-sale, meaning shoppers can accept a discount on their EV purchase directly from dealers.
More Americans are buying EVs than ever before
Republicans have seized on a recent move by the Treasury Department to provide automakers a little leeway around some of the strict rules regarding eligibility to the tax credits’ rules on minerals and materials from “foreign entities of concern” — which includes China.
The final guidance gives car companies a two-year exemption for batteries containing “impracticable-to-trace” battery minerals, like graphite, which frequently comes from China. Those materials are exempt from the rules until 2027. Other restrictions around more prevalent minerals, like lithium, nickel, and cobalt, will come into effect in January 2025. EV batteries with minerals sourced from China, for example, won’t be eligible for the $7,500 credit.
During the markup, Smith claimed that Biden’s “lenient rules that will allow certain EV and battery components directly sourced from the Chinese Communist Party to dodge this restriction.”
Democrats opposed the measure, calling it a potential blow to progress that is ongoing in the American auto industry.
“If this measure passes, we will stop this progress and inadvertently cement Chinese dominance over the EV market for decades,” Rep. Don Beyer (D-VA) said. “This bill will do exactly the opposite of what its supporters and sponsors claim it will do.”
