Congress Is On Track To End America's Battery Boom

The House of Representatives passed a bill that, if enacted, would significantly curtail the US electric vehicle and battery industry by repealing key provisions of the Inflation Reduction Act. According to the REPEAT Project, the bill's elimination of EV tax credits and new restrictions on battery production subsidies could reduce EV sales by 40% by 2030 and halt the battery manufacturing boom, potentially jeopardizing thousands of jobs and rendering some planned battery plants unnecessary. Experts warn that the policy changes will diminish demand for batteries and negatively impact states heavily invested in EV and battery production, shifting the bill to the Senate with a July 4 deadline.

Analysis

The U.S. House of Representatives has passed the "One Big Beautiful Bill," legislation poised to significantly dismantle the burgeoning domestic electric vehicle (EV) and battery manufacturing sectors by repealing key provisions of the Inflation Reduction Act (IRA). According to the REPEAT Project, enactment of this bill could slash annual EV sales by approximately 40% by 2030 and terminate the U.S. battery manufacturing expansion. This legislative shift involves eliminating rebates for North American-made EVs (the 30D tax credit, ending six years early in 2026) and imposing new restrictions on tax credits subsidizing domestic battery pack and cell production (the 45X credit), notably barring projects with even remote ties to China. The International Council on Clean Transportation (ICCT) projects a potential 75% reduction in U.S. battery production by 2030, from a planned 1,050 GWh to 250 GWh, and the vaporization of 130,000 potential EV-related jobs, including 85,000 in battery manufacturing alone, with job losses potentially starting in 2026. Consequently, planned U.S. battery capacity not operational by the end of 2025 might become redundant, placing existing and near-operational facilities, such as Hyundai's Georgia Metaplant, at risk. Of the 128 U.S. battery-related facilities announced post-IRA, 77 have not yet commenced construction or production. The bill, which also includes a $250 annual EV registration tax and supports rolling back emission standards, faces a July 4 deadline in the Senate, with its passage threatening to reverse efforts to onshore battery supply chains and diminish U.S. competitiveness.

Key Decisions for Investors

• Investors should closely monitor the Senate's deliberations on the "One Big Beautiful Bill" given its potential to severely curtail U.S. EV and battery sector growth by repealing crucial IRA incentives, significantly altering investment theses.
• Re-evaluate exposure to U.S.-based EV manufacturers and battery supply chain companies, such as General Motors, that are heavily reliant on the 30D and 45X tax credits, as they face heightened risks of diminished demand, project cancellations, and reduced profitability.
• Factor in the increased uncertainty for U.S. battery projects due to new "China ties" restrictions on the 45X credit and the early termination of the 30D EV tax credit, potentially leading to project unviability and stranded assets.
• Consider potential shifts in global battery supply chain dynamics and competitiveness if U.S. domestic production incentives are withdrawn, potentially benefiting established international players and impacting long-term valuations of U.S.-centric investments.