An electric car at a charging station in Manassas, Virginia, on October 25, 2024. Expanding reliable charging infrastructure will be critical to easing range anxiety and strengthening America’s electric vehicle industry. (Shutterstock/refrina)

Planning Ahead: How to Revitalize America’s EV Industry before ‘China Shock 2.0’ 

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America risks losing its auto industry unless Washington incentivizes more affordable electric vehicles, strengthens battery supply chains, and provides long-term policy certainty.

Electric vehicles (EVs) are responsible for the overwhelming majority of demand for advanced batteries, which have become essential building blocks of the 21st-century economy, with a wide variety of civilian and defense applications. As we argued in the first two pieces in this series, if the United States wants a viable domestic battery industry, it also needs a healthy EV sector to provide the scale and demand necessary to sustain it.

The future of the American EV industry is thus about considerably more than greenhouse gas emissions. It is about whether the United States will retain the ability to design and manufacture one of the most important industrial technologies of the coming decades—or whether China will capture the EV market and the associated supply chains, just as it has done in other strategic sectors over recent decades.

Unfortunately, the Trump administration’s turn against EVs has undermined the economics of domestic EV production just as American companies were beginning to build the capacity necessary to compete. The One Big Beautiful Bill eliminated the federal consumer tax credits for new and used electric vehicles as of September 30, 2025, while leaving in place some support for domestic battery manufacturing. The result is a worst-of-both-worlds combination: Washington recognizes that batteries are strategically important even as it undercuts the largest source of market demand for those batteries. 

If EV manufacturing in the United States is genuinely critical to our future economic and national security, what should be done to revitalize it?  

The obstacles are familiar: EVs remain too expensive for many consumers; range anxiety persists; China already dominates key aspects of battery supply chains; and companies cannot make multi-billion-dollar investment decisions when federal policy can change radically with every election.  

None of these problems is insurmountable. However, solving them will require more than simply going back to subsidizing EV purchases. The United States needs a durable set of policies designed to create scale, foster competition, enhance domestic manufacturing, and, above all else, provide predictability to the market.  

Make EVs More Affordable

There has long been a sense that one must pay a “green premium” to buy an EV. This is no longer the case, especially when you consider the lower energy and lifetime maintenance costs associated with EVs as compared with internal combustion engine (ICE) vehicles. But the perception persists for good reason: America still produces too few affordable EVs. China, by contrast, offers a wide range of electric vehicles selling for less than $30,000. There are few such options in the United States, where the average cost of a new car has soared to nearly $50,000.  

The United States won’t be able to subsidize its way out of this dynamic. Indeed, the design of the consumer incentives for EV purchases under the Inflation Reduction Act is partly to blame here, as they cushioned (predominantly wealthy) consumers from high EV prices. The income ceiling for the $7,500 tax credits was $300,000 per married couple, while eligible vehicles could cost as much as $80,000 for vans, trucks, or SUVs or $55,000 for other passenger vehicles. Both thresholds were too high, incentivizing richer households to buy heavier, more expensive vehicles. 

A new set of incentives could correct for these problems and incentivize EV purchases if manufacturers target the opposite end of the market. A lower threshold for eligible cars—perhaps $40,000 or $45,000 for new vehicles and $25,000 for used vehicles—would incentivize carmakers to focus production on affordable offerings. 

California’s MyFirstEV program offers a useful model. It........

© The National Interest