A new study from the REPEAT Project led by Princeton University’s ZERO Lab warns that the repeal of Inflation Reduction Act (IRA) tax credits could decimate the growing EV manufacturing sector.
The report “Potential Impacts of Electric Vehicle Tax Credit Repeal on US Vehicle Market and Manufacturing” clearly outlines the risks. The Princeton study states that repealing the IRA federal tax credits and the EPA’s clean vehicle regulations would sharply reduce EV demand.
Specifically, EV sales could drop around 30% by 2027 and nearly 40% by 2030 compared to sticking with the policies implemented by the Biden administration. That means the share of EVs among new cars sold would shrink dramatically – from about 18% to 13% by 2026 and from 40% to just 24% by 2030.
“While no one has a perfect crystal ball, this is our best attempt to survey available quantitative forecasts and develop an outlook on US EV sales,” explained the study’s project leader, Jesse D. Jenkins, assistant professor at Princeton’s Department of Mechanical & Aerospace Engineering and Andlinger Center for Energy & Environment in an email. “The report is also the only analysis I’m aware of to date that draws the connection to US manufacturing as well.”
Here’s why this matters: The report points out that repealing these policies wouldn’t just slow down EV adoption – it could seriously derail the US manufacturing renaissance now underway. Up to 100% of planned expansions for EV assembly plants could be canceled or shuttered. Battery manufacturing would also take a huge hit, with between 29% and 72% of battery cell production capacity becoming redundant by 2025. That means factories under construction or those just coming online would be at risk.
To put that into perspective, an Environmental Defense Fund report released in January found that $197.6 billion worth of investments in EV and battery manufacturing have been announced at 208 facilities around the US, with two-thirds announced since the passage of the Inflation Reduction Act in August 2022.
It’s probably a good time to point out that, in order to qualify for IRA federal tax credits, EVs must be domestically assembled, use battery components that have been substantially domestically produced, and use critical minerals produced, processed, or recycled in North America or free trade agreement countries.
Why, then, is the Trump administration torpedoing an industry that’s achieving the very thing it says it wants to achieve, which is to boost domestic manufacturing and jobs?
And let’s not forget the broader EV supply chain – materials, parts, and component suppliers across the country would also suffer, though these effects haven’t even been fully quantified yet.
Top comment by BCV
Killing the EV tax credit combined with the "promised" tariffs would involve a level of financial destruction in the auto industry that would make the 2008 bailouts look like a minor wobble.
Which is why I don't think the promised tariffs will materialize. But this administration doesn't seem to care about consequences, so who really knows.
Most people have very little understanding of the web of medium & large suppliers sitting behind the major automakers. These are commonly thinly capitalized companies operating on razor thin margins. It only takes a small financial shock to shut some of these companies down.
Guess what happens to a auto assembly line that has 4,999 components out of the 5,000 components needed to make an automobile.
Bottom line: Repealing the tax credits and regulations wouldn’t just slow down EV sales – it would threaten the jobs, investments, and communities counting on America’s EV manufacturing boom.
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