Uncertainty over President-elect Donald Trump’s plans for federal tax credits and loan programs supporting American electric vehicle manufacturing could stall Tennessee’s fast-growing electric vehicle and clean energy industries, analysts say.
Tennessee has seen an estimated $12.6 billion in investments in new clean energy projects since the passage of the Inflation Reduction Act under President Joe Biden in 2022, according to an October Washington Post analysis of data from the Massachusetts Institute of Technology and energy think tank Rhodium Group.
The Inflation Reduction Act created more than 20 tax incentives for clean energy and manufacturing, marking one of the largest climate investments in American history. No Republican lawmakers voted for the act, but the Post’s analysis found “red” states — including Tennessee — have so far received the lion’s share of investment dollars following its passage.
Low-cost federal loans and tax credits for U.S.-produced batteries and battery components have helped companies stand up more cost-competitive electric vehicle plants in the United States, said Harrison Godfrey, managing director of clean energy industry association Advanced Energy United. The Inflation Reduction Act also changed consumer electric vehicle tax credits to incentivize the industry to anchor in the United States. For the credit to apply, vehicles must have batteries made in the U.S. using materials sourced from the U.S. or some allied nations, Godfrey said.
But Trump’s transition team is reportedly planning to scrap the $7,500 tax credit for buyers who purchase new electric vehicles, Reuters reported Friday. And the fate of Biden-era clean energy programs remains unclear.