{"id":14578,"date":"2025-08-04T10:52:15","date_gmt":"2025-08-04T14:52:15","guid":{"rendered":"https:\/\/pluginamerica.org\/?p=14578"},"modified":"2025-09-05T14:36:36","modified_gmt":"2025-09-05T18:36:36","slug":"12-ways-the-megabill-hurts-ev-adoption","status":"publish","type":"post","link":"https:\/\/pluginamerica.org\/12-ways-the-megabill-hurts-ev-adoption\/","title":{"rendered":"12 ways the megabill hurts EV adoption"},"content":{"rendered":"

On July 4, 2025, a tax-and-spending bill officially named \u201cThe Act\u201d was signed into law. The new law handed out billions of dollars in fossil-fuel subsidies while actively dismantling EV and clean energy incentives, programs, and regulations. We\u2019re calling it the dirty dozen, 12 ways this legislation directly or indirectly targets electric vehicles.\u00a0<\/span><\/p>\n

The most significant impacts<\/b><\/h2>\n

1. Termination of consumer clean vehicle tax credits \u2013 September 30<\/b><\/p>\n

The last reconciliation package passed in 2022 reauthorized and expanded consumer tax credits for new, used, and commercial electric vehicles. It also extended and expanded tax credits for building out EV charging stations, including incentives for home chargers and large commercial projects. Tax credits were designed to be user-friendly, as upfront incentives and could be used by those without tax liability, including consumers and tax-exempt entities like municipalities, states, and nonprofits. The tax credits were originally set to expire at the end of 2032, but will now expire on September 30, 2025.<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Eliminating these tax credits hurts EV adoption in multiple ways. Over the course of more than 100 years, automakers have optimized the process of manufacturing internal combustion engines. Switching to an entirely new technology requires investment and a learning curve that creates some inefficiencies. This generally results in a higher upfront cost of EVs.\u00a0<\/span><\/p>\n

These tax credits entice buyers to try out electric technology while simultaneously offering a bit of a buffer to automakers to account for the losses associated with making the switch. While EVs save drivers money over time through fuel and maintenance savings, repealing these tax credits makes it harder for consumers\u2013especially working-class consumers\u2013to afford the upfront cost of an EV. Terminating these tax credits will hurt consumers who want to drive electric vehicles while making it harder for legacy automakers to make the switch to electric.\u00a0<\/span><\/p>\n

2. Additional restrictions on manufacturing tax credits<\/b><\/p>\n

Another important tax credit for EV adoption is the Advanced Manufacturing Production Tax Credit. This tax credit supports the build-out of a domestic supply chain for EV batteries and components. Even though lithium-ion batteries were first developed in the U.S., <\/span>China invested heavily<\/span><\/a> in the <\/span>mass production of lithium-ion batteries<\/span><\/a> as traction batteries and now leads the world in battery production and technology. It also dominates the global mineral supply and processing for these batteries.\u00a0<\/span><\/p>\n

The Act modifies the Advanced Manufacturing Production Tax Credit to restrict access to credits for taxpayers with prohibited foreign entity relationships. This means that automakers interested in relying on material assistance from China to develop battery plants in the U.S. to manufacture batteries like Lithium Iron Phosphate (LFP) batteries may not be able to access the tax credits. (LFP batteries are a popular, stable, durable, inexpensive type of EV battery that don\u2019t need cobalt or nickel.)<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

One in four vehicles sold globally<\/span><\/a> this year will have a plug. For U.S. automakers to remain globally competitive, they need to manufacture EVs and build a domestic supply chain that includes EV batteries. Placing additional restrictions on these tax credits that prevent the credits from being used to reestablish important battery technology in the U.S. will hamstring the U.S. auto industry in its transition to domestic EV and battery manufacturing.<\/span><\/p>\n

3. Elimination of monetary penalties for the Corporate Average Fuel Economy (CAFE) Standards<\/b><\/p>\n

CAFE standards were passed by Congress in 1975 to address the oil crisis by requiring vehicles to be more efficient. Since then, the average fuel economy of vehicles has nearly tripled, saving <\/span>trillions of gallons of gasoline<\/span><\/a>. More efficient vehicles save drivers hundreds of dollars each year in fuel costs and directly reduce tailpipe pollution and climate-changing emissions. The reconciliation bill kneecaps these standards by reducing the penalties to $0, for noncompliance.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Eliminating penalties for noncompliance hurts EV adoption in two ways. First, the way CAFE standards work is that automakers must meet a minimum <\/span>average<\/i><\/b> fuel economy across their entire fleet.<\/span> As mentioned earlier,<\/span> automakers transitioning to EVs typically lose money on them at first. But EVs have been powerful tools in meeting CAFE compliance targets. Since EVs are so efficient, they can drive up fleet efficiency averages, allowing <\/span>automakers flexibility<\/span><\/a> in meeting the standards.\u00a0\u00a0<\/span><\/p>\n

The second way this change hurts EV adoption is that EV-only automakers will take a huge hit from the loss of credit revenues. Automakers that manufacture gas guzzlers and don\u2019t meet the standards buy credits from automakers that do meet these standards. EV-only manufacturers like Rivian, Tesla, and Lucid rely heavily on these credits for revenue to help them establish their fledgling businesses. This year, credit sales will contribute <\/span>$2.17 billion to Tesla\u2019s bottom line.<\/span><\/a>\u00a0In 2024, Rivian generated <\/span>$325 million in revenue<\/span><\/a> from regulatory credits, which helped the company remain financially viable as it gained traction.<\/span><\/p>\n

Direct impacts<\/b><\/p>\n

4. Cancellation of remaining funds from Department of Energy loan programs<\/b><\/p>\n

Congress rescinded, or took back, any funds that have not been committed through signed contracts from the <\/span>Advanced Technology Vehicles Manufacturing (ATVM)<\/span><\/a> loan program.<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Loans like these support major investments in U.S. EV manufacturing. The loans\u2019 effects catalyze private capital to build facilities that create jobs, develop local economies, and make EVs less expensive for consumers. One of these DOE loans helped Rivian build its <\/span>Georgia manufacturing site<\/span><\/a>. General Motors used one of the loans to work with LG Energy Solution to establish a battery plant to manufacture Ultium battery cells. Ford, Nissan, and Tesla have also used these loans to advance cleaner vehicle technology manufacturing. Companies that were planning on using these loans to build manufacturing facilities, but have not yet signed agreements, are out of luck, and the companies and communities relying on the jobs from these plants will suffer.<\/span><\/p>\n

5. Clawback of uncontracted funding for the <\/b>EPA Clean Heavy-Duty Vehicle program<\/b><\/a><\/p>\n

This program supports the replacement of diesel heavy-duty vehicles with electric heavy-duty vehicles, including electric school buses across the country, but particularly in communities with poor air quality.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Heavy-duty vehicles only make up about 10% of vehicles on the road, but they produce <\/span>28% of greenhouse gas emissions<\/span><\/a> and 57% percent of particulate matter emissions, which cause serious health impacts. These pollutants disproportionately affect the health of people living in lower-income neighborhoods and communities of color. The market for heavy-duty electric vehicles is less established than the light-duty EV market, and providing funding to support the heavy-duty clean vehicle industry while reducing pollution in the hardest-hit areas is a win-win. Without this funding, EV manufacturers go without support, and more heavy-duty diesel vehicles get replaced with heavy-duty diesel vehicles, not EVs, keeping air quality harmful in many places.<\/span><\/p>\n

6. Repealed authorization for <\/b>Greenhouse Gas Reduction Funds (GGRF)<\/b><\/a> and rescission (clawback) of unobligated program funding\u00a0<\/b><\/p>\n

The GGRF was designed to support disadvantaged communities that are disproportionately affected by pollution. The program provided resources for clean energy, including electric transportation.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Eliminating unobligated funds from GGRF removes funding for transportation electrification in the communities that need it most. It also takes away funding that can be directly used to purchase EVs or install infrastructure in these communities.<\/span><\/p>\n

7. Cancellation of any remaining funds for <\/b>Climate Pollution Reduction Grants<\/b><\/a><\/p>\n

These grants can be used to electrify vehicles to reduce pollution in states, cities, tribes, and territories.\u00a0\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

This removes Congressionally-approved federal funding to address pollution, air quality, and climate issues through EV and charging infrastructure investments. It means fewer EVs will be purchased and fewer chargers installed in cities, states, tribes, and territories. Not only does this directly reduce EV sales, but the lack of charging infrastructure investment and buildout erodes consumer confidence in driving electric vehicles and poses a barrier to EV adoption.\u00a0<\/span><\/p>\n

8. Clawback of unobligated funding for <\/b>Environmental and Climate Justice Block Grants<\/b><\/a><\/p>\n

Electric vehicle and infrastructure projects that benefit disadvantaged communities were eligible for funding through this program.\u00a0<\/span><\/p>\n

How this hurts EV adoption\u00a0<\/b><\/p>\n

Eliminating support for projects that include vehicle electrification directly reduces EV adoption.\u00a0<\/span><\/p>\n

9. Elimination of additional funds for low-income and disadvantaged communities appropriated through the <\/b>Diesel Emissions Reductions Act<\/b><\/a> (DERA) program<\/b><\/p>\n

The Inflation Reduction Act included $60 million of funding specifically to reduce diesel emissions from trucks and vehicles in disproportionately impacted communities, typically lower-income communities and communities where people of color live, to address the negative health impacts of vehicle pollution in these communities. Vehicle electrification projects are eligible for these grants.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Similar to the answer to No. 5, this rescinded or clawed-back funding disrupts programs that transition dirty diesel vehicles to clean electric vehicles. This means that older, high-polluting vehicles will stay on the roads longer and that fledgling heavy-duty electric vehicle manufacturers will sell fewer vehicles.\u00a0<\/span><\/p>\n

10. Cancellation of additional funding for GSA Emerging Technologies.<\/b><\/p>\n

This includes funds that can be used for the <\/span>electrification of the federal government fleets<\/span><\/a>.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

The General Services Administration manages over 650,000 vehicles. Based on EVs\u2019 cost savings and reduced maintenance, the vast majority of these should be electric. Removing incentives to electrify this massive fleet slows EV adoption and makes the government more reliant on oil and gas. It also eliminates an incentive to install charging infrastructure, which supports range confidence and drives EV adoption.<\/span><\/p>\n

Indirect impacts<\/b><\/p>\n

11. Termination of Clean Energy Tax Credits\u00a0<\/b><\/p>\n

While the termination of solar and wind tax credits doesn\u2019t directly impact EV sales, they are likely to slow EV market growth indirectly. Solar photovoltaics and onshore wind generation are the <\/span>least expensive<\/span><\/a> options for electricity generation today. By withdrawing subsidies for these options, affordable clean energy capacity will decline, and electricity prices will become more expensive. Numerous analyses predict U.S. household electricity expenses to go up by between <\/span>$78 and $192 annually<\/span><\/a>.\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

One of the big selling points of electric vehicles is that they cost less to fuel with electricity. If electricity costs rise and gas prices stay low, EV cost savings are reduced; these cost savings are a major driver of EV adoption. Rooftop solar tax credits are also being cancelled. EV drivers are <\/span>three times more likely<\/span><\/a> than gas car drivers to have home solar panels. We hear from EV drivers that they <\/span>love being energy-independent<\/span><\/a> when they <\/span>power their cars with energy they create<\/span><\/a>. Eliminating tax credits on solar panels will remove an incentive for consumer clean energy investments and clean vehicles at the same time.\u00a0<\/span><\/p>\n

12. Elimination of unspent funds for programs to support the electric grid<\/b>\u00a0<\/span><\/p>\n

These include loan programs for Energy Infrastructure Reinvestment and Transmission Facility Financing, Grants to Facilitate the Siting of Interstate Electricity Transmission Lines, and Interregional and Offshore Wind Electricity Transmission Planning, Modeling, and Analysis.\u00a0<\/span><\/p>\n

The rescission of the Tribal Energy Loan Guarantee Program will undermine consenting Tribal energy development organizations’ efforts to grow technical capacity to develop energy resources on Tribal lands, integrate energy resources, and build resources for energy-related environmental programs.<\/span>\u00a0<\/span><\/p>\n

How this hurts EV adoption<\/b><\/p>\n

Similar to the repeal of solar and wind tax credits, this will lead to higher energy costs and will reduce cost savings from driving electric if gas prices continue to stay low.\u00a0<\/span><\/p>\n

The kicker<\/b><\/h2>\n

American taxpayers spend roughly <\/span>$20 billion<\/span><\/a> each year to subsidize the oil and gas industry through tax breaks and consumer subsidies for things like home heating oil.\u00a0<\/span><\/p>\n

In addition to eliminating clean energy subsidies and programs, this bill handed oil and gas drillers a major victory by directing the IRS to factor \u201cintangible drilling costs\u201d into corporate tax liabilities. According to Kingdom Exploration:\u00a0<\/span><\/p>\n

The 2025 One Big Beautiful Bill Act transforms oil and gas investing by allowing 100% immediate tax write-off of working interest investments against any income source. This unprecedented tax incentive makes oil well investments one of the most powerful wealth-building and tax-reduction strategies available to high-income earners.<\/span><\/i><\/p>\n

This is expected to cost taxpayers an additional <\/span>$1.1 billion in lost tax revenue<\/span><\/a>, as it effectively allows oil and gas drillers to avoid the <\/span>Corporate Alternative Minimum Tax<\/span><\/a> completely. In addition, the bill mandates oil and gas lease sales and requires lease auctions in Alaska at least four times over the next 10 years. The bill allows oil and gas companies to leap ahead in line and expedite permits by paying a fee,\u00a0 and discounts the royalty rates that oil and gas companies pay to drill and extract on public lands to the lowest levels in nearly <\/span>two decades<\/span><\/a>. The bill also adds <\/span>$171 million<\/span><\/a> to the taxpayers\u2019 bills to buy crude oil from oil companies to refill the Strategic Petroleum Reserve.<\/span><\/p>\n

But, EVs are here to stay<\/b><\/h2>\n

In spite of the regressive, environmentally, economically, and socially harmful provisions in this bill, there are a few things we are optimistic about. <\/span>Plug In America\u2019s 2025 EV Driver Survey<\/span><\/a> was recently published, and it showed that EV loyalty continues to grow among EV drivers. EV drivers consistently love their cars, and this year, we saw more younger EV drivers join the fan club. Nearly 92% of EV driver respondents said it is likely or very likely their next vehicle will be an EV, an increase from the 89% of EV driver respondents who said the same last year.<\/span><\/p>\n

We also found that as people are exposed to EVs more, they become more likely to purchase or lease one. So, sharing your EV adventures with neighbors and family members is key to accelerating EV adoption. Plus, our survey found that once drivers get their own EV, the vast majority of concerns they had about batteries, range, technology, reliability, and cost fade.\u00a0<\/span><\/p>\n

The rest of the world is moving to EVs. China now sells more EVs each year than all vehicles sold in the U.S., including gas-powered vehicles. This bill will isolate the United States and cede leadership on clean energy and EVs to more ambitious countries. Still, the global momentum of clean energy and clean vehicles will continue. The U.S. will eventually follow along, sacrificing this opportunity to address climate change, reduce pollution and related public health damages and costs, build the economy, catalyze innovation, and create millions of good-paying jobs, making it more likely that we will buy future vehicles from other countries.\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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