The year is 2030 and about half of all cars sold in the world are electric. Thanks to new battery and charging technologies, electric vehicles (EVs) are cheaper than anticipated and the fear of range-anxiety is immaterial. Barring a few competitors in South Korea and Europe, this market belongs entirely to China. Such a scenario is increasingly a base case. Already in 2025, the majority of Chinese EVs are cheaper than their fossil equivalents and are flooding the world with low-cost exports, including in emerging markets from Ethiopia to Brazil. Alongside producing over 60 percent of the world’s EVs and 80 percent of its batteries, Chinese companies have unveiled new breakthroughs that will solidify their dominance in automobile markets: EVs that charge in five minutes, batteries that doesn’t require any costly critical minerals, and a luxury EV that can drive for 14 hours on a single charge. These are tectonic shifts in one of the most politically and economically vital manufacturing sectors across developed nations.
Notably, the United States is missing from the picture—but ongoing negotiations among Republican lawmakers on the heels of the House reconciliation bill passed last month will decide whether this becomes reality. There has been much attention paid on the energy front to the bill’s changes in tax incentives for clean electricity projects. Equally consequential, but receiving far less attention, are the provisions that would disrupt the emerging industrial base for electric vehicles, batteries, and critical minerals.
The House bill, which is now with the Senate, would repeal the EV tax credit, strip manufacturers of the ability to monetize production incentives quickly, and add sweeping new restrictions on foreign sourcing and technology collaboration. These moves would not only derail Detroit’s efforts to develop globally competitive electric vehicles, but also undermine the Trump administration’s stated goals of securing critical minerals and revitalizing U.S. manufacturing. EVs have become symbolic in partisan debates, but their industrial significance transcends politics. Senate Republicans must now reckon with the long-term economic and security consequences of reversing course.
Actions already taken by the Trump administration have injected bearish sentiments across U.S. EV markets. Even before the House text was released, uncertainty around the future of Biden-era energy incentives had already done its damage. Bipartisan cleantech funding worth billions of dollars has been frozen by federal agencies and $6.9 billion in clean energy projects were voluntarily canceled in the first quarter of 2025 alone. The vast majority of projects canceled—roughly $6.3 billion—were battery factories. The Trump administration’s aggressive tariffication and its ensuing unpredictability have hit U.S. automakers especially hard and resulted in a number of them downgrading their annual sales outlooks.
Despite China’s dominance across the battery supply chain, the Biden administration’s bet to build a domestic industrial base was both strategic and sound. Batteries are essential for electric vehicles, grid-scale storage, consumer electronics, and defense applications—and they are key demand drivers for a myriad of dual-use minerals. The Inflation Reduction Act and the Bipartisan Infrastructure Law together provided a suite of demand- and supply-side incentives that had all the makings of an industrial policy.
This multifaceted approach used every lever of government. On the demand side, the 30D New Clean Vehicle tax credit had sourcing requirements that required the onshoring—or, at the least, friendshoring—of components and minerals that went into the batteries of a qualifying electric vehicle. On the supply side, the 45X Advanced Manufacturing Production tax credit provided incentives at every segment of the battery supply chain from the processing of critical minerals to the production of cathodes and anodes to the assembly of battery packs. These were further buoyed by grant and loan programs that helped finance domestic processing facilities, cathode and anode manufacturing, and cell assembly lines.
By the end of the Biden administration, there were over 200 planned EV and battery supply chain projects worth $184 billion scattered across the country—especially concentrated in the Midwest and the Southeast, which was making a name for itself as the “battery belt.” These investments were part of a broader all-of-government strategy to reorient critical mineral sourcing and processing around U.S. and allied supply chains. For example, the U.S. International Development Finance Corporation issued a loan to Syrah Resources in November 2024 to support operations at the Balama graphite mine in Mozambique. A portion of the mine’s output was bound for Vidalia, Louisiana, to a processing facility built by Syrah with a separate loan from the U.S. Department of Energy’s Loan Programs Office that would be eligible for the 45X credit. The anode-grade material produced by the facility would ultimately be used in batteries for EVs sold by U.S. automakers, enabling those vehicles to qualify for the 30D tax credit available to consumers.
Domestic and international efforts were increasingly aligned under a more cohesive industrial policy. From the Department of Defense’s expansive use of Defense Production Act funding to the Export-Import Bank’s revival of its long-dormant import finance authority, federal agencies moved in concert to build a more secure and diversified battery supply chain. But critically, those upstream investments were only viable because the 30D and 45X tax credits created long-term, predictable demand for materials and manufacturing in the United States.
That foundation is exactly what the House proposal now threatens to dismantle. Repealing the electric vehicle tax credit—the sole federal demand-side incentive for EVs built with U.S.- and allied-sourced batteries and materials—would undercut the financial viability of domestic and non-Chinese supply chain projects. These projects were structured around the expectation of long-term market certainty. Stripping away that certainty would not only freeze new investment but also undermine innovation. The U.S. is well positioned to lead in next-generation battery technologies like lithium-sulfur, lithium metal, and silicon anodes—but without a reliable domestic market, those breakthroughs will struggle to reach scale and compete internationally.
The proposed House legislation also introduces new eligibility restrictions that would remove incentives for battery factories and mineral projects with any involvement from foreign entities of concern. Notably, the overwhelming majority of foreign battery deals in the United States involve Japanese and Korean companies, with only a small handful of proposed joint ventures involving Chinese firms. However, nearly all of these factories depend on capital equipment—specialized, often boutique machinery used in mineral processing and battery cell production—that is nearly impossible to source without Chinese manufacturers. These restrictions could disqualify projects that have no Chinese ownership or control but remain linked to globalized supply chains, effectively stalling the battery belt before it even gets off the ground.
A cautionary example of what’s at stake is A123, an American pioneer of lithium iron phosphate (LFP) battery technology. Without supportive industrial policy, A123 struggled to scale and ultimately filed for bankruptcy in the early 2010s. The company was legally acquired by a Chinese firm, who then scaled up the core technology, and helped kick-start China’s global lead in LFP production. We can’t afford to repeat that mistake. In fact, the U.S. might take a valuable lesson from China’s success—where absorbing as much Chinese tech as possible would help expedite the U.S.’s industrial base and access to relevant high-tech machinery.
The great risk to U.S. competitiveness isn’t dependence; it’s policy incoherence. Securing the supply of critical minerals has been given great importance by the Trump administration, from executive orders to the ongoing deals with Ukraine, Saudi Arabia, and the Democratic Republic of the Congo. The stubborn fact, however, is that minerals don’t move without markets. Moreover, without a stable demand signal for batteries and EVs built outside China’s orbit, no amount of supply diplomacy will matter.
The United States is at a strategic crossroads now on whether it can truly compete in the global vehicle market, innovate next-generation batteries, and secure mineral supply chains. The first step is recognizing that all three imperatives are intertwined.