U.S. House Republicans Propose Ending EV Tax Credits, Repealing Fuel Efficiency Rules

House Republicans have introduced a sweeping tax reform proposal that would eliminate electric vehicle (EV) tax credits and repeal federal fuel efficiency rules aimed at encouraging automakers to produce zero-emission vehicles.

The proposal, set for review by the House Ways and Means Committee on Tuesday, calls for ending the $7,500 tax credit for new EV purchases and the $4,000 credit for used EVs after Dec. 31. An exception would allow automakers that have not yet sold 200,000 EVs to continue offering the new-vehicle credit for one additional year.

See also: U.S. House Speaker Signals Likely End to $7,500 Federal EV Tax Credit Amid Budget Talks

Genevieve Cullen, president of the Electric Drive Transportation Association, criticized the proposal, saying it undermines U.S. leadership in clean energy. “Plans to abandon U.S. leadership in energy innovation by gutting federal investment in electrification are catastrophically short-sighted,” Cullen said, warning that the move could benefit foreign competitors and harm domestic industry and employment.

In 2024, the U.S. Treasury awarded over $2 billion in point-of-sale EV rebates to consumers. The proposed legislation would leave in place battery production tax credits for manufacturers, but introduce a new condition starting in 2027. Under the provision, vehicles containing components made by certain Chinese companies or using Chinese-licensed technology would be ineligible for the credit—a measure that could impact U.S. automakers like Ford Motor and Tesla.

See also: U.S. House Votes to Block California’s Gas Car Ban by 2035

The bill also seeks to terminate a loan program supporting advanced technology vehicle production. If passed, it would rescind unobligated funding and repeal corporate average fuel economy (CAFE) standards and greenhouse gas emissions rules for model years 2027 and beyond. Oversight of these provisions would fall to the House Energy and Commerce Committee.

Several large loans were approved during the final weeks of President Joe Biden’s term, including $9.63 billion for a Ford and SK On joint venture to build battery plants in Tennessee and Kentucky, $7.54 billion for Stellantis and Samsung SDI’s battery projects in Indiana, and $6.57 billion for Rivian’s planned EV facility in Georgia. These investments are part of broader efforts to scale U.S.-based EV and battery manufacturing.

Source: Reuters