Republicans Propose Legislation that Could Give China the Upper Hand in US EV Market



Republicans have introduced a bill aiming to eliminate the US EV tax credit included in the Inflation Reduction Act, a move that could hinder progress in US EV manufacturing. The Inflation Reduction Act allotted billions of dollars for climate spending, much of it earmarked for EV tax credits, and led to significant investment and job creation in the American auto manufacturing sector. Critics argue that the new bill, if passed, would make EVs less affordable for Americans, discourage domestic EV manufacturing, and effectively give China the lead in global EV production.

Elimination of EV Tax Credit would Benefit Chinese EV Manufacturing

A bill has been proposed by Republicans that seeks to end the US EV tax credit, an action which could detrimentally affect US progress in EV manufacturing, potentially allowing China to take the lead.

Impact of the Inflation Reduction Act on American Economy and Manufacturing

The Inflation Reduction Act allocated hundreds of billions of dollars to climate spending, with a significant proportion directed towards EV tax credits. This move, an extension of the original $7,500 EV tax credit from 2008, improved access to these credits by removing the caps previously imposed. Additionally, it introduced a $4,000 used EV tax credit limited to lower income groups. Despite restrictions, these credits have revitalized American auto manufacturing, paving the way for numerous investments in new factories and job creation. Over $210 billion has been invested in new or expanded factory projects since President Biden initiated his EV push.

Republican Opposition to the Inflation Reduction Act

Republicans have introduced a counter act named the “ELITE” Vehicles Act aimed at eliminating the clean vehicle credit which benefits new, used, and commercial electric vehicles. Introduced by John Barrasso, a republican senator from Wyoming with ties to the oil & gas industry, the act aims to benefit fossil fuel donors at the expense of the environment and American manufacturing.

Chinese Advantages and American Losses from EV Credit Repeal

China is currently witnessing a boom in EV manufacturing and consumer demand. If the EV tax credit in the US is removed, Chinese EVs could gain a competitive edge in the US market as American EVs would become more expensive. Barrasso’s bill serves to intensify competition from Chinese EVs while undermining the US auto industry. Notably, the act does not address the $760 billion in subsidies received by the polluting industry each year in the US.

The proposed act has only been introduced in the Senate and has yet to pass through committee or to a vote. If passed, it is predicted to be vetoed by President Biden. Regardless, the introduction of this act reflects republican intents to jeopardize American health, economic prosperity, and the future of the auto industry.

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