The recent study conducted by the REPEAT Project, led by Princeton University’s ZERO Lab, has raised concerns about the potential impact of repealing the Inflation Reduction Act (IRA) tax credits on the electric vehicle (EV) manufacturing sector. The report, titled “Potential Impacts of Electric Vehicle Tax Credit Repeal on US Vehicle Market and Manufacturing,” highlights the risks associated with rolling back these tax credits and the EPA’s clean vehicle regulations.
According to the study, if the IRA federal tax credits and clean vehicle regulations are repealed, EV demand could plummet by as much as 30% by 2027 and nearly 40% by 2030. This significant drop in demand would result in a drastic decrease in the market share of EVs among new cars sold, from approximately 18% to 13% by 2026 and from 40% to just 24% by 2030.
Jesse D. Jenkins, the project leader of the study and an assistant professor at Princeton’s Department of Mechanical & Aerospace Engineering, emphasized the importance of this analysis in forecasting the future of EV sales in the US. The study also highlights the potential impact on US manufacturing, with up to 100% of planned expansions for EV assembly plants at risk of being canceled or shuttered. Battery manufacturing would also suffer, with a significant portion of battery cell production capacity becoming redundant by 2025.
The report underscores the significant investments made in EV and battery manufacturing in the US, with $197.6 billion worth of investments announced at 208 facilities across the country. These investments have been crucial in driving the domestic manufacturing renaissance and creating jobs in the EV industry.
The study also points out that in order to qualify for IRA federal tax credits, EVs must meet certain domestic manufacturing and sourcing requirements. Repealing these tax credits and regulations could not only slow down EV sales but also threaten the jobs, investments, and communities that rely on America’s EV manufacturing boom.
It is essential to consider the broader impact on the EV supply chain, including materials, parts, and component suppliers, which could also suffer as a result of repealing these policies. The study serves as a warning that rolling back these tax credits and regulations could have far-reaching consequences that extend beyond just the EV market.
In conclusion, the report emphasizes that repealing the tax credits and regulations would not only hinder EV sales but also jeopardize the progress made in boosting domestic manufacturing and creating jobs in the EV industry. It is crucial to consider the long-term implications of such a decision and the potential impact on the growing EV manufacturing sector in the US.
