If the Trump Administration eliminates the federal EV tax credit, it could have a devastating effect on U.S. manufacturing, a new study warns.
Produced by the REPEAT Project, a Princeton University group that analyzes environmental policy, the study found that killing the $7,500 tax credit would reduce EV demand, as well as endanger manufacturing jobs associated with making those vehicles and the batteries that power them.
“The report is also the only analysis I’m aware of to date that draws the connection to U.S. manufacturing as well,” Jesse D. Jenkins, an assistant professor at Princeton and the study’s project leader, told Electrek in an emailed statement.
2025 Cadillac Optiq
Without the tax credit, researchers estimate that EV sales in the U.S. could decrease 30% by 2027 and nearly 40% by 2030. That might cut predicted EV market share from 18% to 13% in 2026 and from 40% to 24% in 2030, according to the study.
Such a slowdown could lead to 100% of planned expansions of U.S. EV assembly plants being canceled, and could make 29% to 72% of U.S. battery-manufacturing capacity redundant, according to the study. Factories that are idled—or never built in the first place—mean fewer jobs. And based on the distribution of current EV-related manufacturing projects, red states could be hit the hardest.
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Analysts have viewed the tax credit as vital to continuing U.S. EV sales growth. It was among the trends that led S&P Global Mobility, in 2023, to predict that U.S. EV sales could more than double by 2030. But the Trump Administration is expected to target the credit, just as it’s targeted other Biden Administration policies related to charging infrastructure and emissions standards.
The potential loss of the tax credit, and other Trump policies, led J.D. Power to revise its EV market share retail forecast to be flat this year, at 9.1% of the U.S. retail market, but with resumed growth after this year to 26% of the market by 2030. Considering expected market growth among mass-market models outside EV-specific brands like Tesla, Rivian, and Lucid, that could still lead to 3% sales growth.
