GOP tax bill could make EVs more expensive, hit auto sector
A Republican-backed tax and spending bill passed by the U.S.House on Thursday aims to roll back federal clean energy incentives - a move critics warn could raise costs for consumers and derail investments in Georgia's burgeoning electric vehicle and battery industry.
The GOPbill, backed by President DonaldTrump, targets provisions in then-President Joe Biden's signature climate and health bill, known as the Inflation ReductionAct. These include the $7,500 federal tax credit for buyers of EVs largely manufactured in North America,production tax credits formanufacturers of EVs and batteries, and funding for EV charging stations.
The bill, which will now be debated in the Senate and could undergo changes, also includesa new annual fee for electric vehicle and truck owners that would make buying and owning an electric vehicle more expensive.
Georgia is among states that led in the number of jobs created - and expected to come - in clean energy since the Inflation Reduction Act passedin 2022,according to researchers at the Rhodium Group, an independent research provider that combines policy expertise and data-driven analysis to help decision-makers navigate global challenges.
The manufacturing tax credits and incentives for buyers have spurred U.S. investment, with Georgia being one of the epicenters with about 38,000 created and promised jobs.
Kia committed more than $200 million and the creation of more than 200 jobs at its West Point plant to accommodate assembly of the company's EV9 SUV. Meanwhile, Hyundai's Metaplantnear Savannah, which is producing the Ioniq 5 and Ioniq 9 models, is a more than $7 billion investment the company has promised will eventually employ 8,500 people. EV upstart Rivian plans to build a manufacturing site nearSocial Circle, east of Atlanta.
Some industryleadersand observers, however, are warning the policy shift could slow project rollout.
Albert Gore III, executive director of the Zero Emission Transportation Association, which represents many EV and battery manufacturers, said companies may "reassess the scale and the pace of their investments in the United States."
U.S. Sen. Raphael Warnock, D-Ga., called the tax and spending bill "a win for China's economy and a loss for Georgia workers."
China is a top EV manufacturing nation and the country, like many advanced economies, is adopting electric vehicles at a far faster pace than the U.S.
"Georgia has been a national leader in creating clean energy jobs, particularly with new battery and electric vehicle supply chains coming to our state's rural communities," Warnock said in a statement, calling the legislation "a non-starter for me in the Senate."
Fully electric vehicles produce no tailpipe emissions, reducing harmful exhaust that pollutes the air and contributes planet-warming carbon to the atmosphere.
The IRA took an existing U.S. EV tax credit and narrowed criteria to qualify to vehicles that are predominantly made inNorth America to encourage reshoring of jobs and investment. Biden had campaigned in 2020 on expanding EV adoption in the U.S.
But Hyundai Chief Executive Officer Joseph Muñoz previously told The Atlanta Journal-Constitution that "(c)onsumer preferences - not politics or government politics - dictate Hyundai's business decisions."
The automaker has said it decided to build an EV factory in the U.S. during Trump's first term, and announced it would build the facility in Georgia shortly before passage of the IRAin 2022.
Because of new criteria in the IRA, EVs made by Hyundai and other automakers lost eligibility. Vehicles it makes in the U.S. now get at least partial credit.
Hyundai has never invested in the U.S. based on incentives, Muñoz said previously, instead focusing on the market opportunity. Hyundai and Kia representatives were not immediatelyavailable for interviews.
Gov. Brian Kemp's office also emphasized the "market-based approach" Georgia takes on economic development. A spokesperson told the AJC that thanks to the state's efforts, "the e-mobility space was already growing in Georgia before the federal government's intervention." Kemp "vocally opposed the Biden administration's decision to not only pick winners and losers but also to impose counterproductive mandates that disadvantaged Georgia-based auto manufacturers and disincentivized organic consumer adoption of electric vehicle," the spokesperson added.
Subsidy repeals could deter consumer demand for electric vehicles, Cox Automotive Director of Industry Insights Stephanie Valadez Streaty said. Cox Automotive, like the AJC, is owned by Cox Enterprises. Cox Enterprises also has about a 3% stake in Rivian.
EVs made up about 7.5% of total U.S. new vehicle sales in the first quarter of 2025, per data from Cox Automotive, and the figure is growing, though not as fast as many industry observers expected. That's in part because of fears over range and charging away from home and because of persistently high interest rates for vehicleloans. EVs also generally have higher sticker prices.
In the short term, Streaty said, sales might grow as consumers look to buy electric vehicles before incentives go away. But in the long term, she said, there might be negative consequences because of price premiums on EVs. A survey of dealers conducted by Cox Automotive in the second quarter of 2025 revealed that "a majority of auto dealers feel the tax credits are having a positive effect on the market."
One independent dealer commented in the Cox report that consumers appear worried about limited infrastructure for electric vehicles and "fear of plummeting value and inability to repair anything but the simplest of issues," among other things.
Kevin Ketels, an associate professor of supply chain management at Wayne State University, said electric vehicles are expensive as is. To keep advancing the industry, he said, there needs to be a wider portfolio of vehicles that include lower cost EVs with fewer features than the expensive models on the market.
"If we discontinue the incentives in order to develop and roll out this technology, it's going to happen at a much slower pace, and we're going to fall behind the rest of the world," he said. The U.S. is already lagging behind China in creating EV manufacturing processes and supply chains, he added.
Although current incentives largely benefit affluent customers, "if we give more time and there are more government incentives to make this transition, I think it would benefit less affluent customers in that situation," Ketels added.
Copyright (C) 2025, Tribune Content Agency, LLC. Portions copyrighted by the respective providers.
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