The EV Tax Credit Could Come Back. Here's What Stands In The Way

Some Democratic leaders are seeking to revive the $7,500 federal electric vehicle tax credit if they regain control of Congress after the upcoming midterm elections. Bringing back the incentive would likely boost EV sales and help the U.S. catch up with other countries in the global EV race, but it would have to overcome a mountain of political hurdles before that happens.

More than 160 House Democrats are backing proposed legislation from California Rep. Mike Levin and Illinois Rep. Sean Casten to restore Biden-era clean energy tax credits that were axed last year, Politico reported Monday. Called the Cheap Energy Act, the bill seeks to revive tax credits under the Inflation Reduction Act, including EV incentives. It also aims to modernize the electricity grid without making ordinary customers foot the bill for upgrades needed for AI data centers.

But the political argument for EV incentives has changed. Politico reported that the tax credit may now be a liability for Democrats, following years of Republican attacks on EVs. President Trump has repeatedly disparaged EVs, once saying, “They don’t go far. They cost a fortune.” He softened his stance after Tesla CEO Elon Musk poured hundreds of millions of dollars into his 2024 presidential campaign, but Trump has continued to attack broader clean energy policies.

The policy shift has caused a resurgent gas car industry in the U.S., even as Europe, China, and much of the developing world moves rapidly toward EVs.

This incessant thrashing of EVs may be taking their toll. Voters might associate the tax credit with benefitting wealthy coastal elites who could already afford EVs without it, Politico reported. And EVs continue to suffer from deep polarization across America. According to a Pew Research Center survey from April, Americans were more likely to consider hybrids than EVs. Interest in EVs was far down from what it was in 2022, with popularity waning among Democrats as well.

The bigger obstacle to restoring the credits, however, may be divisions within the Democratic Party itself. Senate Minority Leader Chuck Schumer called for reviving clean energy tax credits at a gala in Washington but notably left EVs out of his remarks, per the outlet. Democratic Sen. Elissa Slotkin of Michigan has also struck a cautious tone on EVs. “I want all of the energy,” she told Politico. “I don’t want just one. I don’t want to pick and choose.”

Even if Democrats regain control of both chambers in November, restoring the tax credit would require legislation to pass the House and Senate and be signed by the president, who could veto it. Overriding that veto would require a two-thirds majority in both chambers, which would be a much higher bar than a simple majority. It's not impossible, but many Republicans would need to support it too, which given the current climate seems unlikely.

The perception problem with EVs, however, doesn’t square with reality. The tax credit had income limits and was designed to benefit low and middle income earners, not the ultra wealthy. It helped drive a record 1.3 million new EV sales in 2024 in the U.S., and helped erect a domestic battery manufacturing industry to reduce America’s reliance on China. Much of this investment has gone in Republican governed states like Georgia and South Carolina, boosting local economies and generating thousands of jobs.

EVs today are also an order or magnitude superior to combustion cars in terms of software, refinement, efficiency, and operating costs. Automakers continue pushing the boundaries with range, with many new EVs able to cover more than 400 miles on a single charge. America in Q3 surpassed 80,000 public fast-charging ports, a new milestone.

The technology is clearly advancing rapidly, but it will also need favorable policies for sustained growth. If not, it could remain hostage to political cycles while the rest of the world races away.

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