The House-passed budget bill makes a number of substantive EV policy changes, which will set back the adoption of EVs. This has been expected and will understandably have negative effects on climate change, accelerating the frequency and severity of natural disasters, air pollution, health, home insurance costs, endangerment of species, and destruction of our environment. What is less obvious are the numerous ways in which the new EV policies will hurt American manufacturing and a key goal of the Trump administration, the development of American production of the critical minerals needed for EVs chips and AI. Trump recognizes the importance of critical minerals and has stated a willingness to take other countries or their minerals by force, if necessary (Greenland, Canada, Ukraine). But in a sharp reversal, his chosen EV policies would instead undermine use of American sources of supply by undermining the economic incentives to develop them.
Fortunately, the Senate still has to act; that chamber may reduce some of the damage. But it is clear from Trump’s personal arm-twisting in the House prior to the vote, that the House version is his chosen path.
During the campaign, we were told that the primary objective of Trump’s tariffs was to return manufacturing jobs to the US from overseas. Apparently, American jobs manufacturing EVs were silently excluded from that objective. According to the International Council on Clean Transportation (https://www.nytimes.com/2025/05/23/business/electric-vehicles-house-tax-bill.html) the House budget bill is expected to eliminate 130,000 US manufacturing jobs, primarily in Michigan, Texas, and Tennessee.
The White House may argue that manufacturing jobs are minor collateral damage, as the primary objective of the budget bill was to free up funds for other objectives. The New York Times article (linked above) noted that these freed-up funds will be used mostly to “cut taxes, primarily for high-income households and businesses.” The House budget will not reduce the deficit; rather the federal deficit is expected to balloon by several trillion dollars in the next decade.
If cutting taxes is the byword, EV owners were excluded, as the budget bill targets them for a specific new tax, er “fee”, of $250/year, ostensibly to offset the highway taxes avoided by not using gasoline. However, independent estimates of the federal highway taxes foregone by EV owners are about $100/year, suggesting the new tax is a targeted penalty, not a compensating offset.
Fundamentally, the House bill makes EVs more expensive in multiple ways. Most directly, it eliminates the federal tax breaks for EV purchases while maintaining the tariffs on imported EVs and the components that go into EVs. This will make new EV purchases less price-competitive than those of ICE cars and is expected to sharply curtail US EV sales. As Musk has famously noted, that will hurt his business (Tesla) but do even more damage to his competitors, likely eliminating smaller producers and shrinking the EV product lines of the major legacy car producers.
The timing is bad for all American manufacturers. According to the consultancy Rho Motion, Chinese EV sales were up sharply (35%) in the last 12 months and now account for 3.3 million vehicle sales a year. European EV sales were also dramatically up (25%) and account for about half that number (1.2 million sales). American EV sales edged up (5%) to only half the European sales total (0.6 million). Saddling American manufacturers with hostility and higher costs is hardly the way for the Trump Administration to boost American manufacturing jobs.
The largest obstacle to US EV sales appears to be the weak state of the US charging infrastructure (especially evident in the Four Corners area of southern UT, northern AZ, and NM). Trump has frozen the funds committed by the Biden Administration for improving the US charging infrastructure (though courts may yet overturn that); the House budget bill eliminates all future federal spending on charging stations.
The second largest obstacle to US sales is the longish down times required for fast-charging EVs on road trips. The Chinese have recently demonstrated 5 min charging (from 20 to 80%) of road-trip worthy EVs, but the House budget bill blocks the US adoption of this advanced technology. A Ford factory in Marshall, Michigan is likely to be the first victim of this ban, as Ford had planned a new battery factory there to build advanced EV batteries using current Chinese technology. Instead of learning from the best available international technology (as the Chinese did a few years ago to acquire western technology), Trump has shut the door on joint ventures that allow the technology to be transferred in the opposite direction.
Republicans have long held “states rights” to be the protector of local values, but Trump is now making an exception for EVs. On the same day that the budget passed the House, the Senate voted to block California from protecting its clean air by revoking California’s ability to promote EVs (which are usually followed by ten other states, including Colorado). Apparently, granting “states rights” is a policy that doesn’t apply when Trump says so.
Taken together, these multiple strands of anti-EV policies (raise costs, block jobs, block chargers, block factories, block new technologies, block state initiatives, impose punitive taxes) add up to a seismic shift in the international automotive economic landscape. As Mike Murphy, a veteran Republican operative (and CEO of the bipartisan EV Politics Project) put it in the NYT article linked above), “It’s a big win for China and bad for American manufacturing”. One suspects it sets in motion a paradigm shift for American manufacturers: they are conceding international sales, largely to the Chinese.
This result has consequences for strategic minerals, especially rare earths (used for the many motors, large and small, in a modern car, and of course lithium, which is used for the main battery in an EV). If demand for EVs falls, the price supporting domestic production of these strategic minerals falls. This has knock-on effects of national security, as these same materials have many key economic and military uses. But in his quest for reversing Biden’s progress on those fronts, Trump is shooting himself (and EV buyers, American car producers, and the US) in the foot.
Thanks to Deborah Lycan for editorial help.
Thanks to Deborah Lycan for editorial help.
