Princeton analysis: Killing IRA’s EV tax credits would decimate US EV, battery manufacturing

Repealing the EV tax credits in the Inflation Reduction Act could decimate the nascent EV and battery manufacturing industries in the US, according to a recent analysis by Princeton University’s Zero Lab.

The report concluded that as many as half of existing EV assembly plants could close if President Donald Trump gets his way on killing EV initiatives implemented under the Biden administration.

Researchers found that axing clean vehicle tax credits and weakening tailpipe emissions regulations would lead to:

• The cancellation of all “planned construction and expansion of US EV assembly” capacity.
• The closure of between 29% and 72% of battery cell manufacturing plant capacity, and the cancellation of all planned facilities.
• EV sales dropping by approximately 30% by 2027 and 40% by 2030 compared to projections under current policies.
• A decline of 18%–40% in EVs’ projected market share growth in the next five years.
• A cumulative decline of 8.3 million EVs and plug-in hybrids on US roads by 2030.

Shifting policies: Trump has signaled his intentions to dismantle federal policies aimed at spurring adoption and production of zero-emissions vehicles, including repealing subsidies and incentives in the IRA.

One of the report’s focuses is the 30D New Clean Vehicle Tax Credit, which was part of the former administration’s broader agenda aimed at decarbonizing transportation and spurring domestic investments in clean energy. The tax credit has strict sourcing provisions that, among other requirements, stipulate the vehicles be built in and use battery components primarily from North America. The 45X Advanced Manufacturing Production Tax Credit incentivizes investments in domestic battery manufacturing.

“Together, this pair of tax incentives have succeeded in supporting over $85 billion of capital investment in electric and plug-in hybrid vehicle assembly and battery manufacturing facilities currently operating or under construction across the United States,” the report states.

At the moment, the US has more than 500 EV manufacturing facilities across nearly every state, according to the BlueGreen Alliance Foundation and Atlas Public Policy’s EV Jobs Hub.

“Taking a sledgehammer to a growing sector of the nation’s auto industry is a terrible idea,” Jason Walsh, executive director of the BlueGreen Alliance, a labor and environmental advocacy organization, said in a statement. “It will cost jobs immediately and severely hamper the nation’s ability to remain competitive as demand for clean vehicles grows worldwide.”

Executives in the auto industry and clean-energy sector have been sounding the alarm about the potential consequences.

“We’ve already sunk capital…in battery production and assembly plants all through Ohio, Michigan, Kentucky, and Tennessee,” Ford CEO Jim Farley said at a conference in February, according to the Detroit News. He warned that “many of those jobs will be at risk if the IRA is repealed.”

Although investments tied to the IRA have overwhelmingly benefited GOP districts, Republicans in Congress have largely avoided speaking out in favor of the clean energy incentives, The Guardian reported—though 21 Republican legislators signed a letter warning of some of the potential consequences of repealing the IRA.

Meanwhile: The International Council on Clean Transportation released an analysis suggesting that repealing the IRA would threaten 130,000 US auto manufacturing jobs and another 310,000 indirectly related jobs by 2030.

The projected job losses would be most extreme in states with large concentrations of EV and battery manufacturing investments, like Michigan, Tennessee, and Texas.

“These job losses would cascade throughout the economy, affecting not just autoworkers but also employees in mineral processing, retail, hospitality, and others dependent on a strong manufacturing base,” Stephanie Searle, chief program officer at ICCT, said in a statement.