Trans-Pacific View

The Bipartisan Clash Over US Electric Vehicle Policy

Recent Features

Trans-Pacific View | Economy | East Asia

The Bipartisan Clash Over US Electric Vehicle Policy

The Biden administration’s strategy to compete with China’s dominance hasn’t won buy-in from Republicans, who are skeptical about the entire industry.

The Bipartisan Clash Over US Electric Vehicle Policy

U.S. President Joe Biden (front) views the electric Ford E-Transit Van with Ford Exec. Chair Bill Ford and UAW President Ray Curry, right, as he tours the North American International Auto Show at Huntington Place in Detroit, Sep. 14, 2022.

Credit: Official White House Photo by Adam Schultz

On May 14, the Biden administration released a fact sheet announcing that the tariff rate on electric vehicles from China under Section 301 will increase from 25 percent to 100 percent in 2024. This tariff is intended to protect American manufacturers from China’s allegedly unfair trade practices. However, over the past three years, the Biden administration’s policies on the electric vehicle (EV) industry have yielded disappointing results, drawing continuous criticism from the Republican Party. In the context of the 2024 U.S. presidential election, the development of the EV industry has become a focal point of debate between Democrats and Republicans. 

Recently, electric vehicles have become an increasingly partisan issue in the United States, as both parties hold strong but different stances. Republicans accuse Democrats of attempting to eliminate gas-powered cars, while Democrats emphasize policies aimed at addressing the global threat of climate change. These debates primarily revolve around whether the United States should continue to strengthen support for its new energy industry and how to safeguard its domestic EV industry, further accelerating the politicization of the EV issue. 

In December 2021, Biden formally proposed an ambitious goal for the EV industry: by 2030, EVs should account for 50 percent of the domestic market share, and the U.S. should have 500,000 EV charging stations nationwide. Despite ongoing support from the Biden administration for EV infrastructure and the domestic supply chain, EVs in the United States remain at a disadvantage compared to traditional vehicles. In 2023, EVs and hybrid vehicles accounted for 16 percent of U.S. auto sales, a rise from previous years but still significantly lower than the 84 percent share held by non-hybrid internal combustion engine vehicles. 

Moreover, the operational rate of charging facilities is extremely low. Despite Congress allocating $7.5 billion over more than two years for the construction of EV charging infrastructure, only seven EV charging stations have been put into operation across four states. This suggests that Biden’s EV industry policies are unlikely to achieve the development goals set out in 2021 during his tenure.

This year, with the presidential election looming in November, the Biden administration has continued to increase investment in EV infrastructure and implement support such as tax credits for the domestic EV industry. On January 11, 2024, the Biden administration announced a $623 million allocation to build a convenient, affordable, and reliable EV charging network across the United States. This initiative aims to reduce the negative impact of carbon emissions on the climate and promote U.S. leadership in the EV charging sector.

Furthermore, the Biden administration has leveraged narratives such as the impact of foreign overcapacity on the development of the U.S. new energy industry and national security risks posed by foreign EV technologies to justify its aggressive support for the domestic EV industry. During her trip to China in April, U.S. Treasury Secretary Janet Yellen laid out plans to formalize dialogue with China over excess industrial capacity in EVs, solar panels, and batteries. She emphasized that Washington would not accept U.S. industry being “decimated.” Besides, the Biden administration has announced a investigation on connected vehicles using Chinese technology and software services, claiming these technologies pose significant risks to U.S. national security and individual privacy. 

The administration has listed China as a “Foreign Entity of Concern,” restricting tax credits for Chinese-made EVs sold in the United States, thereby increasing the competitiveness of domestically manufactured EVs and supporting the growth of the local EV industry. On May 3, 2024, the U.S. Department of Energy (DOE) announced the final interpretation of the statutory definition of “Foreign Entity of Concern” (FEOC) under Section 40207 of the Bipartisan Infrastructure Law. According to the DOE, an entity is considered an FEOC if its headquarters, place of incorporation, or location of relevant activities is in China, Russia, Iran, or North Korea, and it holds 25 percent or more of the voting rights, board seats, or equity. 

The Treasury Department’s final rule on the Section 30D clean vehicle tax credit stipulates that starting in 2024, EVs containing battery components manufactured or assembled by an FEOC will not be eligible for the tax credit. In other words, electric vehicles with battery components manufactured or assembled by entities with 25 percent Chinese ownership will be ineligible for the purchase tax credit.

Biden’s policies on the green transition of the vehicle manufacturing industry have been criticized by Republicans as both “radical” and “ineffective.” Following the May 3 publication of the final rule for Section 30D of the Inflation Reduction Act (IRA) regarding clean vehicle tax credits, Democratic Senator Joe Manchin criticized the rule for its loopholes. He argued that the relaxed restrictions on U.S. EV manufacturers procuring graphite from China for EV battery production is “effectively endorsing ‘Made in China.’”

Moreover, Republicans have criticized the Biden administration’s EV policies as too radical, potentially harming the U.S. auto industry. In May 2024, Republican attorneys general from 25 states sued the Environmental Protection Agency (EPA), demanding the repeal of the strictest tailpipe emission rules for cars and light trucks introduced in March, which are seen as accelerating the transition of the auto industry to electrification. Kentucky Attorney General Russell Coleman, a Republican, argued that these regulations would harm the U.S. economy, threaten jobs, and even undermine the U.S. electricity grid. Coleman claimed that the Biden administration is willing to sacrifice the U.S. auto industry and its workers in service of its radical green agenda.

In March, former President Donald Trump – who will once again challenge Biden in the 2024 election – shared a litany of complaints against EVs with news network CNBC: “First of all, they don’t go far. They cost too much and they’re all going to be made in China. And the auto workers are going to vote for Trump.” Given Trump’s increasingly aggressive stance on EV policies, if he were to be elected, it is highly likely he would adopt disruptive policies, overturning Biden’s support and development goals for the EV industry in the United States. 

However, Biden and Trump do agree on one point: both favor imposing extremely high tariffs on imported electric vehicles. In a speech in Ohio on March 16, Trump accused Biden’s EV policies of failing to prevent foreign dumping of electric vehicles into the United States. He claimed that if elected, he would invoke “a 100 percent tariff on every single car” those companies attempt to export into the United States. After two months, Biden’s administration announced the same tariff on EVs imports from China. 

Currently, it remains unclear what impact the 100 percent tariff will have on the U.S. electric vehicle market. However, the bipartisan consensus on high tariffs for imported EVs, coupled with the challenges in implementing domestic automotive industry transformation policies, indicates that the acceptance level of EVs in the U.S. market is not high. A recent Gallup poll found that while EV ownership has increased, fewer people are considering purchasing an EV in the future. Currently, 16 percent of respondents either own or are seriously considering buying an EV, with 35 percent potentially considering it, down from 43 percent last year. Those who would not buy an EV have increased from 41 percent to 48 percent.

As the U.S. election approaches, the poor implementation and results of Biden’s green goal and policy on vehicle industry have become a focal point of Republican attacks on Democratic governance, sparking the politicization of EV policies. The Biden administration’s green transition agenda and policies for the automotive industry have not garnered sufficient bipartisan consensus and support, leading to opposition and criticism from Congressional Republicans, state-level Republican officials, and election competitors. These issues have made EV development one of the wedges issues in the 2024 presidential election, further politicizing domestic EV policies and industry development in the U.S.