On September 30, Biden-era tax credits promoting electric vehicle (EV) adoption and innovation will come to a screeching halt. Despite helping boost U.S. EV sales by more than 50 percent since 2022, these credits are among the many federal incentives axed by the newly signed “One Big Beautiful Bill.” The move is far more than an isolated blow to the EV industry; it’s a major setback for American global leadership in advanced technology.
American firms like Tesla have pioneered the international EV revolution, but they are losing momentum as political headwinds intensify. The dissolution of clean vehicle credits is just the latest move in a broader policy shift to decelerate the EV industry and bolster fossil fuel production.
Meanwhile, Beijing has invested billions to secure a decisive lead in the EV race, now controlling an estimated 62 percent of the global market. In 2024, China produced 70 percent of the world’s EVs, over 11 times as many as the United States. With rock-bottom prices and increasingly sophisticated technology, Chinese companies are cementing their dominance in auto markets around the world and monopolizing downstream battery and critical mineral supply chains. One of these firms has even dethroned Tesla, the United States’ shining paragon of EV innovation, as the world’s biggest EV seller; Chinese EV giant BYD, short for “Build Your Dreams,” now wears the crown.
The Alliance for American Manufacturing warns that the growing Chinese auto enterprise could pose an “extinction-level” threat to U.S. automakers. The U.S. auto industry, which contributes 3 percent of U.S. GDP and supports more than 7 million jobs, can’t stay afloat – let alone beat China – by clinging to yesterday’s technology. One in five new cars sold worldwide last year was electric, and this share is set to double by 2030. Gas-powered cars can continue to generate profits for now, but demand for these vehicles peaked eight years ago, and they are expected to start disappearing from roads before the end of the decade.
The EV race isn’t just about EVs; it’s a battle for command of the future automotive sector. Many American policymakers seem content to see China dominate EV sales. They don’t appear to realize that they’re not just letting China win on EVs; they’re ceding the entire U.S. auto industry to Washington’s biggest strategic competitor.
With the global EV and battery market projected to reach $2 trillion in value in the next decade, Washington’s failure to support the EV industry is positioning the United States to lose a core pillar of economic power and global influence. Without strong federal support for EVs, U.S. automakers cannot hope to compete with their heavily subsidized Chinese competitors. Foreign firms operating in the U.S. contribute nearly half of American auto production, but the U.S. will lose these investments if its manufacturing infrastructure and technology fall behind global trends. Similarly, U.S. consumers won’t settle for expensive domestic models while the rest of the world enjoys more sophisticated EVs at a fraction of the price.
In essence, Washington is putting its auto industry in reverse at a time when producers must accelerate to remain competitive in an increasingly electrified market. In combination with other regulatory changes, the terminated tax credits are expected to shrink projected EV sales by 40 percent by the end of the decade. If it continues down this road, the U.S. auto industry could become obsolete, frozen in yesterday’s fossil fuel-based technology.
Fortunately, it’s not too late for Washington to make a U-turn. By restoring and improving clean vehicle tax credits, securing battery and mineral supply chains, protecting grant programs for EV infrastructure, and maintaining national tailpipe emissions standards, policymakers can give the United States’ EV enterprises a much-needed boost. The U.S. can also secure its dominance in future technologies by investing in advanced battery research and development through bipartisan, innovation-focused legislation.
These policy changes would advance U.S. strategic imperatives, bolstering a crucial American industry and maintaining U.S. leadership in a multipolar world. Unfortunately, despite their bipartisan benefits, such moves are mired in polarized domestic politics.
The current administration claims that it supports a consumer’s right to choose their vehicle, but if the U.S. continues to pump the brakes on the EV sector as Beijing speeds ahead, it will render the American domestic auto industry a relic of the past. Then, there will be no choice at all – in a few decades, we’ll all be buying Chinese EVs.
