The U.S. Senate’s decision to eliminate a $7,500 tax credit for new electric vehicle (EV) purchases and leases, along with a $4,000 credit for used EVs, effective September 30, 2025, has sparked urgent calls from advocacy groups for the House to intervene, reports Reuters. The Electrification Coalition warns that ending these incentives could jeopardize American manufacturing and jobs, ceding global EV leadership to competitors like China.

Senate Bill Sparks Industry Backlash

The Senate’s bill, passed on July 1, 2025, axes EV tax credits that have driven significant U.S. investment in clean transportation.

The Electrification Coalition stated, “Driving much of the nation’s manufacturing investment at this critical juncture would effectively wave the white flag of defeat, ceding control over the future of transportation to China.”

Calstart, a California-based nonprofit, echoed this, noting that the cuts “undermine American jobs and put American workers and manufacturers at a disadvantage” as global competitors accelerate toward zero-emission economies.

Ev Tax Credit Cuts Threaten U.s. Jobs And Manufacturing, Advocacy Groups Warn

These credits have been pivotal for consumers and manufacturers alike. The $7,500 incentive has lowered the upfront cost of EVs, boosting adoption, while the $4,000 used EV credit has made electric mobility more accessible. Losing them could slow EV sales, currently projected to reach 10 million units globally in 2025, and stall U.S. progress in reducing transportation emissions, which account for 29% of national greenhouse gas output.

Battery Production Wins, Fuel Economy Losses

The Senate bill isn’t entirely unfavorable for automakers. The Alliance for Automobile Manufacturers praised its revision of a battery production tax credit, which “preserved auto-related advanced manufacturing across the country and prohibited Chinese companies from eligibility.”

This protects investments like Ford’s $3 billion battery plant in Marshall, Michigan, now 60% complete and set to employ 1,700 workers by 2026. Ford had warned that the House’s original version risked derailing this project.

However, the bill also eliminates penalties for missing Corporate Average Fuel Economy (CAFE) targets, potentially encouraging production of gas-powered vehicles. Last year, Stellantis paid $190.7 million in CAFE penalties for 2019 and 2020, after nearly $400 million from 2016 to 2019. GM paid $128.2 million for 2016 and 2017.

Easing these fines could save automakers millions but slow the shift to EVs, with U.S. fuel economy standards already lagging behind Europe’s 95 grams of CO2 per kilometer (about 60 miles per gallon equivalent).

Economic and Regulatory Stakes

Ending EV tax credits could ripple through the economy. The credits have spurred $100 billion in U.S. manufacturing investments since 2022, creating 80,000 jobs, per Calstart. Without them, projects like Michigan’s battery plant could face delays, and consumer demand may weaken, with EVs averaging $56,000 compared to $48,000 for gas vehicles. This could widen the affordability gap, especially for used EV buyers relying on the $4,000 credit.

Regulatorily, the move signals a retreat from Biden-era climate goals aiming for 50% EV sales by 2030. As China dominates 60% of global EV production, the U.S. risks falling behind in a market projected to hit $1.2 trillion by 2030. The House now faces pressure to restore the credits, balancing economic growth with environmental commitments.

What’s Next for EV Owners and Industry?

For EV owners, the loss of tax credits could raise costs, though falling battery prices—down 20% since 2023 to $132 per kilowatt-hour—may soften the blow. For manufacturers, the Senate’s battery credit tweak offers stability, but advocacy groups urge the House to act swiftly. As Calstart noted, global competitors are “accelerating the transition toward a zero-emission transportation economy.” The House’s decision will shape whether the U.S. keeps pace.