Preview: "This draft will give competitors such as China 'a huge advantage' in the market and threaten American domestic manufacturing and jobs."

[Written by Zhou Shengming of Observer Network, edited by Gao Xin] According to reports from Reuters, The Wall Street Journal, Financial Times, and other foreign media on May 13, the Republican Party recently released a draft bill that proposes to end government subsidies for renewable energy in the U.S. and eliminate tax credits for electric vehicle purchases.

This draft directly opposes the Inflation Reduction Act proposed by the Biden administration, triggering strong backlash from Democrats and renewable energy companies. Many Democratic politicians and entrepreneurs stated that this draft would severely impact employment in related industries.

According to the draft, the $7,500 federal tax credit for purchasing new electric vehicles will be largely eliminated after 2026. Starting from January 2026, this subsidy will only apply to brands whose cumulative electric vehicle sales have not exceeded 200,000 units.

The $4,000 tax credit for purchasing used electric vehicles will be canceled by the end of this year. Additionally, most investment and production tax incentives for U.S. companies in renewable energy projects will gradually be phased out before 2031, and these incentives will no longer be tied to emission reduction targets.

The Wall Street Journal noted that the "200,000-unit" sales threshold in the new draft will significantly limit the number of models eligible for tax credits. Currently, Tesla, Ford, and General Motors have already surpassed this threshold, while Rivian and Kia are approaching this limit.

Catherine Cortez Masto, a Democratic senator from Nevada, said that these cuts "will destroy jobs and stifle innovation." Chris Hopper, CEO of solar battery company Aurora Solar, commented, "The industry cannot adapt to these changes overnight. The worst outcome could be mass layoffs and a wave of bankruptcies."

Genevieve Cullen, president of the Electric Drive Transportation Association, also criticized the draft. She stated that these plans "abandon federal investments in electrification, handing over America's leadership in energy innovation to competitors, which is extremely short-sighted."

She believes that this draft will give competitors such as China "a significant advantage" in the market and threaten American domestic manufacturing and jobs.

Reuters reported that although the draft retains key battery production tax credits for automakers and battery companies, new provisions stipulate that if the components of an electric vehicle are manufactured by certain Chinese companies or based on authorization agreements with Chinese enterprises, the vehicle will not be eligible for this credit. This provision is expected to take effect in 2027.

"This means that if American companies like Ford or Tesla use Chinese-authorized battery technology in their production processes, they may no longer qualify for the credit," Reuters gave an example.

Analysts said that once the tax credits are canceled, the price of electric vehicles in the U.S. will rise directly. Data shows that the current average transaction price for electric vehicles in the U.S. is approximately $45,600 (about RMB 327,800). A well-known data company, J.D. Power, estimates that if the credit is canceled, the price will rise to about $51,200 (approximately RMB 368,100).

To date, this draft represents the most radical move Republicans have taken to end the Biden administration's green energy policies. Trump has repeatedly criticized this policy as a "green scam." The Financial Times reported that Republicans announced last weekend that they plan to cut loans and related grants for climate change programs at the Department of Energy.

It is understood that this bill will also restrict the eligibility of foreign companies for tax credits. The Financial Times believes that this policy aims to curb Chinese-backed solar companies from entering the U.S. market.

Notably, this draft has sparked intense controversy within the Republican Party. Chip Roy, a representative from Texas, wrote on social platform X: "Does this bill completely abolish the Inflation Reduction Act, thereby preventing disaster projects such as battery factories and solar farms in my district? No, it just phases them out gradually, which will only trigger a rush to build and bring other problems while retaining many projects that should not exist."

The draft will be submitted to the Ways and Means Committee for consideration on Tuesday and will then undergo broader debate in the House of Representatives.

The Financial Times said that currently, Republicans only hold a slim majority in both houses of Congress. It is understood that Republicans hope to pass the bill through the budget reconciliation process in the Senate with a simple majority vote, without needing to reach the 60-vote threshold required for ordinary bills.

This article is an exclusive contribution from Observer Network and cannot be reprinted without permission.

Original source: https://www.toutiao.com/article/7503866756348494345/

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