Potential Impacts of Electric Vehicle Tax Credit Repeal on US Vehicle Market & Manufacturing

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Last Updated on: 18th March 2025, 03:19 am

The re-election of President Donald J. Trump has created considerable uncertainty regarding the future of the U.S. automotive industry and the nation’s transition to electrified vehicles. Through executive orders, President Trump has indicated intentions to eliminate federal regulations aimed at reducing greenhouse gas emissions from cars and trucks, repeal subsidies supporting electric vehicle (EV) purchases, and halt or redirect federal grant programs designed to expand EV charging infrastructure.

To facilitate analysis of the broader economic impacts of these potential changes to federal energy and climate policies, the REPEAT Project has developed updated scenarios assessing how these policies might influence the U.S. vehicle market, as well as their implications for domestic battery and EV manufacturing.

Summary

If EPA tailpipe emissions regulations and federal clean vehicle tax credits are repealed:

• Sales of battery electric vehicles could drop about 30% in 2027 and 40% in 2030 relative to a scenario where current policies are continued.
• The share of battery electric vehicles in new light vehicle sales could drop from about 18% to 13% in 2026 and 40% to 24% in 2030.
• Cumulatively, 8.3 million less EVs and plug-in hybrids could be on U.S. roads in 2030.
• As much as 100% of planned construction and expansion of U.S. electric vehicle assembly and half of existing assembly capacity could be at risk of cancellation or closure.
• Between 29% and 72% of battery cell manufacturing capacity currently operating or online by the end of 2025 would also be unnecessary to meet automotive demand and could be at risk of closure, in addition to 100% of other planned facilities.
• There would be further (unquantified) impacts on U.S. materials, parts, and component suppliers upstream of EV and battery assembly.

Full PDF here.

News from Princeton University ZERO Lab. Project leader: Jesse Jenkins.

Jenkins, J. (2025). Potential Impacts of Electric Vehicle Tax Credit Repeal on US Vehicle Market and Manufacturing. REPEAT Project. https://doi.org/10.5281/zenodo.15001499