House bill threatens to eliminate EV tax credits and reshape the market

In the United States, a contentious bill dubbed the One Big Beautiful Bill Act was narrowly passed by the House of Representatives on May 22, 2025, with a vote of 215-214. This legislation seeks to eliminate electric vehicle (EV) tax credits originally introduced under the Inflation Reduction Act, which were designed to incentivize consumers to purchase electrified vehicles. If enacted into law, this would drastically impact the sales of electric vehicles, currently accounting for about 8% of total car sales in the U.S.  An automotive expert, Lauren Fix, highlighted that the removal of the $7,500 consumer tax credit could lead to a steep decrease in EV sales, projecting that sales might plummet to about 2% of the total market. While Tesla, the leading manufacturer of electric vehicles in America, is expected to withstand the elimination of these incentives due to strong brand loyalty and enhanced production efficiency, other automotive producers, such as Hyundai and Ford, may react by reducing their production of electric vehicles significantly. The new legislation carries broader implications for the automotive industry. Manufacturers were previously pushed to develop and market electric vehicles through government mandates and incentives, but the potential removal of these credits might reverse this trend. Concerns grew particularly in light of the GOP's opposition to what they termed as wasteful spending, advocating instead for market determination of vehicle types. Crying foul, many proponents argue that the elimination of EV incentives could decimate the advancements made in the automotive sector, particularly for American jobs involved in EV production and sales. Another point of contention is the new regulatory measures set to be implemented along with the bill, primarily affecting EV drivers who could soon face additional fees imposed by the Federal Highway Administration. These proposed fees aim to compensate for the lack of gas tax contribution from electric vehicle owners. Moreover, the bill's failure to protect or phase out tax credits for battery manufacturing risks significantly slowing the transition towards renewable energy sources within the auto industry. Industry insiders are left wondering if this legislative change could change the market dynamics for years to come, forcing consumers and manufacturers alike to navigate a rapidly evolving landscape bereft of fiscal incentives that once made electric vehicle purchases more feasible.