NEW: Risks from Vehicle Tax Incentive Reform

Today, Atlas published a new report titled “Risks from Vehicle Tax Incentive Reform in 2025.” The paper enumerates the risks of repealing or significantly altering the federal tax credits for vehicles and manufacturing. Check out a summary of the report’s major findings.

Thanks to a favorable environment, including powerful tax credits creating supply and demand for key products like electric vehicles (EVs), we are in the beginnings of a manufacturing renaissance in the United States. Federal tax credits are designed to work together — the 45X manufacturing credit is fueling a manufacturing expansion, while demand-driving credits for new vehicles (30D), used vehicles (25E), charging (30C), and commercial vehicles (45W) provide U.S. battery manufacturers and critical mineral producers with an avenue to market for their products.

Global sales of EVs are rising — reaching 17 million vehicles sold in 2024 — and companies are increasingly building out supply chains in the United States. As the world is buying more and more EVs, reforming or eliminating federal tax credits for EV and battery supply chains would cede ground to China and jeopardize tens of thousands of jobs and billions of dollars of investment in communities across the country.

Source: International Energy Agency

Between 2009 and 2024, companies pledged $224 billion in investments and announced 243,000 jobs across 557 EV, battery, and critical minerals facilities in the United States. These recent, large investments stand to keep the United States in the race but by most measures, the country is well behind. Continued federal government support from the existing tax framework levels the playing field for companies operating in the United States as the vehicle market becomes more competitive.

The Congressional districts with the most announced investment are all represented by Republicans, led by Nevada’s 2nd at $16 billion, followed by North Carolina’s 9th, Georgia’s 10th, Georgia’s 1st, and Kentucky’s 2nd.

Source: Clean Economy Tracker

Many of the investments would not have happened without the tax credits. Ford CEO Jim Farley, for example, stated, “[m]any of our plants in the Midwest that have converted to EVs depend on the production credit. We would have built those factories in other places, but we didn’t.” He also warned that “many of those jobs will be at risk” if Congress repeals the tax incentives.

Lawmakers in Congress have also noted the benefits to the communities they represent. Representative Buddy Carter (R, GA-1) said in December 2024 that “[fellow congressional Republicans] understand that there may be parts of [the federal tax code] that can help us secure our supply chain…[W]e should look at keeping it.”

Eliminating or otherwise making the federal tax credits too difficult to attain would risk the future of transportation and energy jobs and harm the U.S. economy and national security, likely leaving the United States at a permanent disadvantage against Europe and especially China.

Click here to read the full report.

Read the Complete Weekly Digest