The House of Representatives passed a bill Thursday limiting federal tax credits from flowing to electric vehicles with parts produced in China , the latest effort by Republicans to increase pressure on the Chinese Communist Party and present a contrast with the Biden-Harris administration.
The bill, referred to as the End Chinese Dominance of Electric Vehicles in America Act of 2024, passed in a 217–192 vote, with seven Democrats joining Republicans in favor. It was one of five measures with sights set on China taken up by the chamber this week.
Its passage comes just months after the Treasury and Energy departments eased regulations for the administration’s electric vehicle tax credit. At the time, officials said the rules were set to encourage the sales of electric vehicles while phasing out the reliance on components made by foreign entities of concern, a designation that includes China, Russia, North Korea, and Iran.
Under the rules governing EV tax credits boosted by Democrats' 2022 Inflation Reduction Act, individuals could be eligible for a tax credit worth up to $7,500 made up of two parts — $3,750 if the vehicle meets critical mineral requirements and another $3,750 if requirements for its battery components are met. For an electric vehicle to be eligible this year, 60% of its battery components and 50% of its critical mineral components must be manufactured in North America. The critical mineral component requirements are set to increase to 60% next year. Only a minority of EVs on the market meet the specifications.
However, critics argued that the rules applying to foreign entities of concern were too soft, claiming the regulations left loopholes for China to receive U.S. federal funds by investing in electric vehicle projects in the United States or by leveraging dominance in the electric battery supply chain.
Rep. Carol Miller (R-WV) proposed the legislation in April, seeking to increase these restrictions on the electric vehicle tax cut.
“China, or any adversary for that matter, should not have any access to American tax credits,” Miller said at the time. To close these so-called loopholes, she proposed redefining the term “new clean vehicle” in the tax code.
Under the bill, the term would no longer apply to vehicles that have a battery with components “extracted, processed, recycled, manufactured, or assembled by a prohibited foreign entity,” such as China, Russia, or North Korea. As a result, anyone with an EV with those components is barred from receiving the tax credit.
These rules would align the Treasury Department's definition of a foreign entity of concern more closely with that of the Commerce Department.
The Biden Office of Management and Budget released a statement opposing the bill, although it stopped short of pledging to veto it. It claimed the bill would raise taxes, punish car manufacturers, threaten jobs, threaten the market, and "undermine our Administration’s work to protect the American automotive supply chain from unfair Chinese competition, and set back efforts to achieve energy security and combat climate change."
The administration called the bill "unnecessary" in light of the previously announced regulations.
"H.R. 7980 would add new, unclear, and unworkable restrictions to the Inflation Reduction Act’s Section 30D tax credit, which already includes strict eligibility restrictions for foreign entities of concern controlled by China and other covered nations," the statement reads.
Before heading to President Joe Biden's desk, the bill would also have to pass in the Senate, where some legislators have already indicated they, too, thought the previous electric vehicle tax credit regulations were too favorable to foreign entities.
In early May, Sen. Joe Manchin (I-WV), who was still a registered Democrat, accused the Biden administration of endorsing “made in China."
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“The entire point of the Inflation Reduction Act was to provide American businesses the incentives they need to bring our energy and manufacturing supply chains back to the U.S., reduce our dependence on foreign adversaries and create good-paying American jobs,” Manchin, who registered as an independent later that month, said in a press release at the time.
“Instead of embracing those opportunities to benefit our country, the Administration is so desperate for Chinese EV components that they are blatantly breaking the law by implementing a bill that they did not pass and ignoring what Congress agreed upon at the expense of American workers and taxpayers, and the consequences are jeopardizing our energy and national security and pulling us further into debt,” Manchin added.
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