House Passes Bill Blocking Tax Credits for Chinese-Backed EVs: Big Win for U.S. Auto Industry?

On Thursday, with 217 in favor and 192 in against, the U.S. House of Representatives passed H.R. 7980, the End Chinese Dominance of Electric Vehicles in America Act of 2024. This bill would exclude electric vehicles with batteries containing Chinese components from tax credit eligibility. The bill has significant support from the Republican majority.

The legislation addresses concerns that existing regulations under the Biden administration’s Inflation Reduction Act, which offers up to $7,500 in tax credits for electric vehicle buyers, do not sufficiently limit the influence of Chinese-made components. To qualify for these credits, vehicles must be assembled in North America and include a certain percentage of battery components and critical minerals sourced from the region.

Introduced by Republican Representative Carol Miller, the bill aims to tighten these criteria. It stipulates that electric vehicles utilizing batteries produced by foreign entities deemed prohibited, including China, Russia, and North Korea, would be ineligible for tax credits.

Should this bill become law, it could impact exports from South Korean companies to the U.S.

However, for the bill to take effect, it must pass the Senate, where the Democrats hold the majority, and receive President Joe Biden’s signature. The White House has expressed opposition to the bill, though it remains uncertain whether Biden will exercise his veto power.

Given the Senate’s composition and the potential for a presidential veto, the bill’s final passage is uncertain. This bill appears to emphasize Republican lawmakers’ intent to protect domestic businesses and workers ahead of the upcoming November elections for both the presidency and Congress.

While the outcome of this bill remains uncertain, the South Korean industry and its government should prepare thoroughly if the high-pressure China-bashing legislation is implemented.