Last year, Americans bought a record 1.3 million electric vehicles. It’s unclear just how many people took advantage of the EV tax credits—whether through a purchase or a lease—to do that. But that credit, and some outrageously good deals from the automakers, undoubtedly helped a lot of people break up with gasoline.
That party comes to an end next week when the EV tax credit expires under the provisions of President Trump’s One Big Beautiful Bill Act. And sooner than expected, too; the credits were originally scheduled to phase out around 2032 as part of the Inflation Reduction Act.
So why did it have to be this way? Were EV tax credits doomed from the start? And why is America so different from markets that are electrifying much more quickly, like China and Europe?
Someone could write a whole book on that topic. For now, you get the highlight reel version in today’s Critical Materials, our morning roundup of industry and technology news. Also on deck: The Ford F-150 Lightning gets a significant BlueCruise update, and Rivian’s electric van gets a safety probe. Let’s dig in.
30%: What Happened To The EV Tax Credits?
Photo by: Ralph Hermens
The short answer to that question is that they were killed by Trump and the Republican-controlled Congress as part of the One Big Beautiful Bill Act’s cost cuts. After all, one study by Penn Wharton found that all the clean vehicle provisions in the IRA would cost about $393 billion between 2023 and 2032. That’s an easy target when you’re trying to cut government spending.
But the actual reasons go much deeper than politics now. Some EV tax credits were introduced in the second George W. Bush administration. During the Biden years, the idea was that tax credits would spur EV demand, car and battery manufacturing at home, and set America up to compete with China as a new-energy powerhouse. That was the “carrot”; the “stick” was ever-stricter fuel economy and emissions rules that would’ve led to a mostly-electric new car market by the 2030s. If anything, the move was pro-capitalism—a gift to automakers to adapt their businesses to compete long-term.
Today, Automotive News examines why that didn’t pan out. One reason is something I’ve said before too: Americans simply do not like being told what to do.
The credit, along with EV requirements from some states, fed the idea that the government was forcing consumers to buy EVs.
“The U.S. consumer is really different,” said Raul Arredondo, principal consultant at eMobility Strategy & Marketing and a former manager of international product planning at FCA. “The main thing is that you shall not tell me what to do. If I want to shoot myself in the face, it’s my right to shoot myself in the face. If I want to spend twice as much money [over the life cycle of] a vehicle, it’s my right.”
And then there’s just how complex the rules were, which led to very few EVs qualifying for the tax credit at purchase and the vast majority getting the price cut only when leased:
The Inflation Reduction Act, which took effect in 2022, eliminated the 250,000 vehicle phaseout but added compliance requirements for sourcing that introduced significant complexity.
“It’s not just, ‘OK, here’s a tax credit.’ It’s, ‘Here’s a tax credit, and then here’s 100,000 pages in the Code of Federal Regulations, and then here are all these other little attachments in terms of sourcing requirements,’ ” said Chad Cummings, CEO of Cummings & Cummings Law. “It’s just a compliance nightmare.”
And then there’s a kind of class issue at work, starting with how EVs tend to emerge as high-end luxury vehicles for well-heeled buyers and then trickle down from there:
EV buyers tend “to be those who have high household incomes, those who can support two vehicles, [those who] have excellent or good credit ratings,” said Todd Cassidy, managing director at Portage Point Partners.
That has created an opportunity for opponents to disparage the credit. The Republican National Committee’s 2022 fact sheet on the EV tax credits called them “a giveaway to the rich.”
You get the idea. It was a lot of things. And Automotive News‘ story is worth a read in full.
But I’ll go deeper into some of this. You also had car dealers who were reluctant to learn how EVs work, install charging systems at their shops, or even educate their customers about how to live with these cars. Then you have the fact that quite frankly, not all of these EVs were that good—not at first, anyway. Most EVs were, candidly, first-draft efforts that are just now starting to feel dialed in.
And then you had the petroleum companies, which even the biggest automakers could never hope to compete against. From disinformation campaigns to political spending to driving the partisan wedge even further, the gas industry managed to come out ahead on this one.
Basically, it was a lot of things. And it is entirely possible that these credits or pro-EV regulations would’ve been axed even if Trump hadn’t been elected. What happens to the American market now is anyone’s guess. Most experts and analysts are expecting EV sales dips in the immediate quarters. But over time, and as EV technology evolves, it will come into its own more naturally.
That doesn’t do much for cleaner air in the meantime, however. And without the help and extra push, it may mean our current slate of automakers won’t be the ones making the cars of tomorrow.
60%: BlueCruise Is Getting Better F-150 Lightning Owners
Ford F-150 Lightning BlueCruise
Photo by: Ford
But you can’t stop progress. And I do think that electrification and autonomous vehicles are ultimately intertwined, and the growth of one will lead to the growth of the other. Theory aside, life is about to get a little easier for F-150 Lightning owners.
Ford announced yesterday that its latest version of its hands-off advanced driver assistance system (ADAS), BlueCruise, is now coming to older Lightning trucks as well: to 2022-2023 F-150 and F-150 Lightning, plus 2024 F-150 Lightning BlueCruise-equipped vehicles.
More from the Blue Oval:
Depending on the model year, the software update will take eligible owners from BlueCruise 1.0 or 1.2 all the way to BlueCruise 1.4. Truck owners who receive this update will experience a more natural drive experience and more time in hands-free mode compared to earlier versions, with fewer interruptions requiring the driver to put their hands on the wheel.
Based on our internal testing, truck customers can stay engaged in hands-free mode on the highway an average of eight times longer compared to the first version of BlueCruise, and five times longer compared to BlueCruise 1.2.
Ford says that means better performance and engagement in hands-free mode around bends and such; greater in-lane stability and less side-to-side movement; more spatial awareness of large Semi trucks in your lane; and hands-free lane changes via the turn signal when the road ahead is clear.
Some good upgrades here for sure. Drop us a line and let us know how it’s performing.
90%: Rivian’s Electric Van Gets U.S. Auto Safety Regulator’s Attention
Photo by: Rivian
The National Highway Traffic Safety Administration has opened a preliminary evaluation into 17,198 Rivian electric delivery vans after it received several complaints regarding the safety of the vehicles’ seatbelts.
The federal auto safety regulator said the probe will focus on the driver’s front outboard seat belt anchorage system, which uses a steel braided cable that may fray, break or unravel, leaving the driver unrestrained in case of an accident.
NHTSA said it had received six reports about potential failures with the driver’s front outboard seat belt anchorage system, with multiple instances in which the braided cable reportedly frayed, broke or unraveled. As a result, the agency’s Office of Defects Investigation (ODI) has opened a preliminary evaluation to see what’s going on. The vans are ubiquitous as Amazon delivery vehicles across the U.S.
All this being said, there have been no reported crashes, fires, injuries or fatalities linked to the potential fault. The NHTSA’s investigators will assess the integrity of the seatbelt assembly, as well as the method of installation and whether there are any design or manufacturing issues that could damage the braided cable.
As reported by Reuters, this is the first step in the NHTSA’s defect process. If serious issues are found during the preliminary evaluation, it could lead to an engineering analysis. That, in turn, could lead to a recall.
The investigation covers the 2022-2023 Rivian electric delivery van. This means that not all vans are affected—the Electric Delivery Van (EDV) or Electric Commercial Van (RCV) went into production in 2021, and over 24,000 units have been built so far.
100%: Will We Ever See EV Incentives Again In America?
2023 Ford Mustang Mach-E GT
Photo by: Patrick George
I’m waiting to see if this current anti-EV policy sentiment in America is a temporary blip or a permanent reset—but you could say that of a lot of things right now.
In the meantime, will we ever see an incentive program like the IRA offered again? Or will even the auto industry be too damaged by this policy whiplash to even want that without some long-term guarantees of stability? Let us know what you think in the comments.
Contact the author: patrick.george@Ev Authority.com
