All eyes are on the One Big, Beautiful Bill Act as it now heads to a not-entirely-receptive Senate after passage in the House of Representatives. If Republicans lose a few senators and aren’t in a position to move the bill past a deadlock via a tie-breaking vote by Vice President JD Vance, President Trump could get very angry. But given that the legislation contains an all-important extension of the 2017 tax cuts, let’s assume that GOP senators who fear the wrath of Don will fall into line.
That would mean it’s game over what has been a burgeoning U.S.-based electric battery industry. InsideEVs’ Tim Levin reviews the situation, duly noting that the bill also takes the axe to EV incentives. The loss of the longstanding $7,500 federal tax credit is likely to damage already slowing EV sales in the U.S., but what’s more alarming is the degree to which the legislation could kill investment in domestic battery manufacturing.
We don’t need batteries if we don’t have EVs to put them in
Levin cites a recent report from Princeton’s REPEAT project that summarizes in admirable detail the current and future landscape of EV and battery production in the States. It’s extremely wonky, but worth a closer look if you care about this stuff. The researches highlight a critical linkage between EV incentives and increasing battery manufacturing capacity. Remember that not so long ago, the Biden administration was aggressively supporting an advanced, domestic battery supply chain.
The Inflation Reduction Act of 2022 reorganized previous EV incentives to favor vehicles made in America. Batteries were also supposed to be largely sourced here. The goal was to stand up an American battery industry that could challenge China’s dominance, maintain national security, and generate potentially thousands of jobs.
Of course, building a bunch of new battery factories is pointless if you don’t have enough electric cars to put them in. REPEAT maintains that if the expected battery manufacturing capacity of 400 GWh per year arrives in 2025, the country would be producing far more battery cells than needed by an EV business dealing with ebbing demand and withdrawn incentives.
The numbers are incredibly depressing
How much excess capacity are we talking about? REPEAT says 29-72%. Let’s get real: an industry that isn’t using a third of its capacity is going to be an industry in big trouble. But an industry that has almost three quarters of its capacity sitting idle? That’s not an industry. One would need Soviet levels of aimless production to keep it going.
It’s not unreasonable to ask if all those big, beautiful battery factories were going to be a good thing. Clearly, the EV market in the U.S. isn’t growing at quite the pace many analysts expected. Meanwhile, EV sales have been booming in China, justifying the country’s foresighted investment in battery manufacturing.
I would also point out that what’s driving the Big, Beautiful Bill politically is perpetuating tax cuts – and finding spending reductions to pay for them. Unbuilt battery factories, future employment, and the fate of EVs in America aren’t exactly top of mind for a GOP that needs to juke the economy before it dips into a recession. Ironically, however, the battery factory boom was poised to lift fortunes in Republican-controlled states. Just goes to show you how twisted and weird life has become for Trump-supporting lawmakers.
