How the Big Beautiful Bill Reshapes EV Trajectory

Author: Arjun Rajan

Editors: Victoria Maza and Clara Conry

The One Big Beautiful Bill is slamming the brakes on America’s electric vehicle boom. As of October 2025, the federal government has been eliminating major tax credits for EVs. The One Big Beautiful Bill ends up to $7,500 in tax credits for new EVs and over $4,000 in tax credits for used cars. Without federal support, EV prices will surge, making electric vehicles increasingly unaffordable for middle-class Americans. Removing these tax credits increases production costs, which increases price. Experts warn that slower growth in electric vehicle sales could delay progress in reducing carbon emissions. The big question now is whether falling battery costs, state incentives, and corporations can keep the electric revolution rolling without federal help.

This isn’t about simply removing a discount. The One Big Beautiful Bill also reduces the Clean Commercial Vehicle Credit, which used to offer up to $40,000 for leasing large clean vehicles like buses and trucks, and ends the 30% Alternative Fuel Infrastructure Credit for EV charging and hydrogen refueling stations. Together, this represents a significant shift away from federal support for the green transition.

Analysis from the Rhodium Group and Princeton’s REPEAT lab report that removing financial supports for EVs will release an additional 400 million metric tons of carbon dioxide into the atmosphere by 2035. The implications extend far beyond car purchases. Transportation accounts for approximately 28% of all emissions, with cars and other passenger vehicles being the largest share. Analysis from the Rhodium Group and Princeton’s REPEAT lab report that removing financial supports for EVs will release an additional 400 million metric tons of carbon dioxide into the atmosphere by 2035.

Subsidies help equalize the cost of purchasing an EV vs a traditional gas car for consumers. Now, EVs are effectively becoming $7,000 to $10,000 more expensive overnight, an increase that manufacturers and businesses cannot easily absorb. For context, the median new car price in the U.S. is about $48,000. Adding another $7,500 to an EV’s price pushes popular models away from the financial reach of people earning $50,000 to $80,000, precisely the demographic that we need to engage for a thorough energy transition. The burden of losing the subsidy falls primarily on consumers rather than manufacturers, since demand for EVs is more elastic than supply; buyers are more price-sensitive and will simply opt out of the market.

Dealerships reported an increase in pre-deadline orders as consumers raced to lock in credits before the September 30th cutoff point. This rush created what economists call demand distortion: a temporary sales spike followed by a predictable fall. 

The OBBB also eliminated an important avenue for making EVs more affordable through leasing. Leasing companies can no longer claim the Commercial Clean Vehicle Credit, which allowed them to pass savings to consumers through lower lease payments. With these credits ending, leasing costs are rising and one of the more affordable paths to EV adoption will disappear. Companies that were planning to transition delivery vans and corporate fleets to electric power now face high prices. Tax-exempt organizations such as schools, nonprofits, churches, and government agencies lose access to credits that could have made electric school buses and municipal vehicles financially viable.

Since the Inflation Reduction Act in 2022, which invested in clean energy, automakers and manufacturers have announced over $130 billion in new clean investments across the U.S. There was confidence that the energy transition was feasible. The OBBB erodes that confidence; when manufacturers plan projects that take over 20 years, policy certainty matters. Several companies have already indicated that they will reevaluate or pause investments. In practical terms, this means tens of thousands of possible manufacturing and construction jobs are lost. Communities that welcomed battery plants and assembly facilities as economic lifelines now face uncertainty about whether those projects will reach completion.

Meanwhile, China and the EU are continuing to expand EV subsidies and production. In 2024, China itself produced over 60% of the world’s electric vehicles, dominating battery supply chains. The OBBB may lead to American consumers purchasing Chinese-made EVs, while U.S. workers lose out on manufacturing opportunities, an ironic outcome for legislation focused on domestic success.

Furthermore, the Alternative Infrastructure Credit helped consumers install chargers with a 30% credit. The credit targeted low-income and rural areas where charging stations are scarce. Without this credit, building charging networks has become much more difficult. Installing a home charger costs $5,000 to $15,000 while commercial fast-charging stations cost even more. Property developers say the credit was essential to their decisions about installing chargers. Additionally, experts warn that disparities will grow between wealthy areas with charging access and poor or rural communities without it. This creates a cycle: fewer charging stations cause more range anxiety, discouraging EV purchases and decreasing sales, hence disincentivizing the construction of charging stations. 

The Rhodium Group estimates that eliminating EV credits could add 400 million metric tons of carbon dioxide to the atmosphere by 2035; that equals the annual emissions of 87 million gas-powered vehicles. U.S. emissions in 2030 could be four to six percent higher than expected. Moreover, increased gas cars also increase air pollution. Nitrogen oxides and particulate matter cause asthma, heart disease, and premature death. These pollutants hit low-income communities the hardest. The American Lung Association shows that zero-emission vehicles could prevent thousands of deaths and save billions in health costs. The OBBB puts a hold and possibly an end to these benefits.The consequences are clear: higher transportation costs, dirtier air, fewer manufacturing jobs, and less resilience toward energy price shocks. The climate crisis will accelerate, causing hurricanes, wildfires, and floods to grow more destructive. Taxpayers will pay for disaster recovery while policy tools sit unused. The OBBB may save the government $200 billion over ten years, but it ignores the serious costs: higher healthcare spending from air pollution, lost economic competitiveness, rising household energy bills, and the mounting price of climate inaction. Sometimes the cheapest option on paper costs the most.