House Passes Bill to Block Tax Credits for EVs With Chinese Batteries

Electric cars for export wait to be loaded on the "BYD Explorer NO.1," a domestically manufactured vessel intended to export Chinese automobiles, at Yantai Port, Shandong Province, China, on Jan. 10, 2024. STR/AFP via Getty Images

WASHINGTON—The House has passed a bill to block consumer tax credits for electric vehicles (EV) with batteries that involve Chinese entities in the supply chain.

The legislation is the last of the Republican-led “China Week” that started on Sept. 9. During the week, the House passed 28 China-related bills focused on addressing the threat to the United States posed by the Chinese Communist Party (CCP) in two areas: technology and influence.

The End Chinese Dominance of Electric Vehicles in America Act passed on Sept. 12 by a 217–192 vote. Seven Democrats voted for the bill.

The debate on the House floor centered on how to strike a balance in pushing more EV ownership to help protect the environment, reducing supply chain reliance on China, and ensuring that U.S. taxpayer-funded credits don’t go to Chinese entities.

The White House opposed the bill, saying it would effectively burden taxpayers and undermine the administration’s climate action efforts by adding “new, unclear, and unworkable restrictions” to the Inflation Reduction Act (IRA). The IRA provides a consumer tax credit of up to $7,500 for buying qualified electric vehicles.

Some Democrats took a similar stance to that of the White House on the legislation.

“The bottom line is this bill will hurt our transition to clean vehicles,” Rep. Judy Chu (D-Calif.) said during the debate.

Rep. Carol Miller (R-W.Va.) defended her legislation on the House floor. She said her bill would “ensure the Chinese companies can no longer be the ultimate beneficiary of the luxury electric vehicle tax credits.”

“The Biden administration has been more concerned about bowing to radical environmentalists than in actually helping develop these technologies right here in America,” she said, speaking about the EV-related technology.

In an emailed statement to The Epoch Times after the bill’s passage, Miller said that the bill was meant to “stop Chinese influence in our supply chain.”

“The Biden–Harris administration has put out regulations on the electric vehicle tax credit that have excluded some of the inputs used to make EVs, giving China unlimited access to the U.S. supply chain. This is devastating for American manufacturers and our national security,” the lawmaker said.

House Speaker Mike Johnson (R-La.) praised the bill.

“American taxpayer dollars should not be used for an electric vehicle credit in an industry propped up by China,” Johnson said.

The Chinese Communist Party has provided tens of billions of dollars in subsidies to the EV industry after identifying the sector as strategic in its “Made in China 2025” industrial policy. The CCP also doubled down at its annual plenary meeting, which concluded in March, calling EVs one of the “new productive forces.”

EVs are seen as one of the products that China is dumping onto the rest of the world.

Based on local government plans for the five years from 2021 to 2025, the China Center for Information Industry Development, an institution under the Chinese Ministry of Industry and Information Technology, expects Chinese EV production capacity to reach 36 million in 2025. With 15 million domestic Chinese EV sales forecasted for 2025, excess Chinese EVs will reach 21 million next year.

In May, President Joe Biden quadrupled tariffs on Chinese EVs to 100 percent from 25 percent.

“China’s using the same playbook it has before to power its own growth at the expense of others by continuing to invest despite excess Chinese capacity and flooding global markets with exports that are underpriced due to unfair practices,” Lael Brainard, director of the National Economic Council, told reporters at a call ahead of the tariff announcement.

As the Biden administration pushes for more EV sales as part of the transition to renewable energy, Congress and the general public have become more aware of China’s monopoly in the industry and wary of China benefiting indirectly from IRA incentives funded by U.S. taxpayers.

Ford’s deal to license EV technology from Chinese battery giant Contemporary Amperex Technology Co. Ltd. (CATL) was one of the high-profile cases.

In February 2023, Ford announced a new $3.5 billion EV plant in Marshall, Michigan, 100 miles west of Detroit, in partnership with CATL. Experts said the business plan would not work with billions of IRA manufacturing credits that would benefit China.

As congressional pressure mounted in questioning the EV factory’s eligibility for tax credits, Ford halted the plant’s construction in September 2023, citing insufficient confidence in the facility’s ability to run competitively.