In this episode, I'm joined by Albert Gore to discuss the fate of the electric-vehicle tax credits under the Trump administration. Gore explains how the consumer credit provides a demand-side signal to complement the supply-side manufacturing credits, and why eliminating either would primarily benefit Chinese manufacturers.
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Text transcript:
David Roberts
Okay. Hello, everyone. This is Volts for March 5, 2025, "The fate of the EV tax credits." I'm your host, David Roberts. The future of the Biden administration's climate agenda has been the subject of fevered speculation since it became clear that Trump would be president. Hardcore MAGA ideologues (and Elon Musk for some reason) want to get rid of all of it, while many Republicans in Congress would prefer a more surgical approach, i.e., they're loath to give up money that's going to their states.
Then again, Congress seems to have been reduced to a peripheral and meaningless onlooker in American public life, so maybe what they think doesn't matter! Maybe DOGE will just press a button and the tax credits will vanish.
Like everything these days, it's extremely difficult to predict. Instead of getting overwhelmed by pondering the fate of the entire agenda, today, I'm just going to focus on EVs, or more specifically, the tax credits that support EVs.
On one hand, the manufacturing tax credits have helped build a ton of EV battery and manufacturing capacity in red states. On the other hand, it has practically become conventional wisdom that the consumer EV tax credit is doomed. My guest today disagrees with that prediction.
He certainly disagrees with the prescription. Albert Gore leads the Zero Emission Transportation Association, a trade group representing companies up and down the EV supply chain. Naturally, he has many thoughts on these matters. We are going to talk all about the credits — their history, the effects they've had so far, the amount of bipartisan support they maintain, and what might become of them in the coming years. So, let's get into it.
With no further ado, Albert Gore, welcome to Volts. Thank you so much for coming.
Albert Gore III
Well, thank you so much for having me.
David Roberts
So, how to approach this? We should just say up front — I mean, I feel like I have to say this now for every pod forever, but like, events are moving quickly, lots of things are happening. Like, for all we know, by the time we're done with this conversation, major government departments could have vanished. So, all of which is to say we're recording this on February 21st. So, you know, let's hope it holds up for two weeks until I can get it out. But just to start with, then, Albert, give me a taxonomy of the tax credits involved here.
Everybody, I think, when they hear "EV support," they hear "EV subsidy," they hear "EV tax credit," they just think mainly of the $7,500 consumer tax credit that you get when you purchase an eligible EV. But there are a bunch; there's kind of a cluster of tax credits. So, can we just, like, figure out what we're talking about here?
Albert Gore III
Yes, always good to name the credits that we're talking about, talk about what they do, and just at the outset, I want to say, I think your summary in broad strokes is representative of a view that a lot of folks have. I would say from my perspective and in my experience, there are many, many caveats to that and a lot of reasons to be hopeful about the reasonableness on the Hill among some folks who, you know, when they're talking about national politics, especially so close to the election, are using us as talking points, but really are trying to be productive in the conversations that we and others are having.
David Roberts
Sure, we're going to get into all that.
Albert Gore III
Yeah, we'll get into it. But to go in order of, I think, large to small, the 45X production tax credit is designed to bring advanced manufacturing investment into the United States. It's not specific to EVs or batteries. It also includes solar and wind energy components.
David Roberts
Am I correct that the bulk of the result thus far is EV and battery manufacturing capacity? Like, is that the bulk of sort of what's been announced in the wake of 45X or am I making that up?
Albert Gore III
That's correct. And I think part of that was an existing wave of investment, a smaller wave spurred on by real movement on EV deployment in the United States between 2015 or so and 2020. So, coinciding with the launch of the Model 3, the Model Y, I mean, these were produced and sold in volumes that were really kind of game-changing, not just for Tesla, but also for the other companies that were seeking to compete and kind of had one foot in, one foot out, but were saying, "Okay, we need to dramatically increase our production capacity. We've now seen proven demand for EVs beyond early adopters and folks who are trying to reduce their carbon footprint."
David Roberts
So, 45X is the big one.
Albert Gore III
It's the big one. And for batteries in particular, I think it incentivized a number of companies, LG, Samsung, Panasonic, SK, to form joint ventures with automakers or form their own battery manufacturing facilities and increase the size of the investment and the speed with which they were seeking to bring these projects online. Because 45X, the value of it, is really targeted at closing the gap between the cost to manufacture a battery in the United States versus manufacturing a battery in China, and the cost to produce things in China doesn't always reflect the price of the products when they enter the market.
A lot of times, they're sold below the cost to produce. So, it's a very difficult challenge. But nonetheless, $35 a kilowatt hour really goes a long way towards closing that gap. And also, for folks who have been tracking this — I'm sure you have for a long time — getting closer to price parity for a comparable EV on a price per kilowatt hour basis for, you know, over 300 miles of range with a comparable ICE vehicle.
So, a big deal and incented new investments in the United States, but also enhanced and pulled forward and made bigger a lot of investments that were sort of already in the planning stage. So, a huge deal. And you mentioned they are disproportionately located in red districts. And that's true. I tend to think of it, you know, more in terms of they're disproportionately located in places that have a really long history of manufacturing and a lot of blue-collar families who are excited about that investment, regardless of where they sit on the district line, excited about the economic opportunity created by a big new, you know, seven and a half billion dollar joint venture battery and EV plant.
David Roberts
Well, I mean, not to rehearse all this history again, but that was sort of by design. I mean, it's not a coincidence that those places are red. You know, it's almost like describing the same thing in different terms. Like these are places that used to have manufacturing. They're hollowed out, hollowed out by globalization, etcetera, etcetera. Thus the sort of reactionary turn in American politics. And the whole kind of theory of the case was you got to revive those areas, flood investment into those areas. And the idea is that it would change politics, which like maybe someday, maybe someday it will. But it doesn't seem to.
Albert Gore III
A 100%. The actual tax credit itself has no bearing on where a company locates other than in the United States. You know, states like Tennessee, Georgia, Kentucky, Ohio, Michigan, the Carolinas, they have really amazing economic development teams that go around the world to pitch specific sites in their states. "This is a mega site for a battery facility, a vehicle assembly plant." And so it enhances that proposition. There are some areas in the, particularly in the battery and the mineral supply chain and you know, everything adjacent to EV assembly, where there is a bit of a zero-sum game between resources and talent and IP and investment going into the United States or within the community of FTA countries that, the US sphere of influence, or going to China or to countries that are being invested in or being served by China with their growing demand for batteries and EVs.
It's a bit of an oversimplification, but not really, because there are some statistics that are pretty staggering that I think we can highlight later. But the degree to which the Chinese auto market has really exploded over the last 25 years, it's gone from 0% to 40% of global automotive sales. And a lot of those are EVs, their capacity to manufacture batteries. You know, we saw this in the solar industry too 15 years ago, and to the detriment of some domestic solar manufacturers flooding the market with cheap solar panels. It was not great for investing in that type of manufacturing in the United States, but it did seed the world with a ton of low-cost panels.
So, what we're doing with EVs now is very, very different than that. And by the way, there is now a really thriving domestic American solar manufacturing industry.
David Roberts
I mean, the whole proposition was, "Let's not let the same thing happen to EVs that happened with solar panels." I mean, that was kind of like from the clean energy people. That was sort of the premise of the whole thing. Like, we don't want to just enjoy the cheap outcomes, we want to be involved. Okay, so 45X is a big one, but let's get through them.
Albert Gore III
Yeah, we'll go on. So the next biggest is the 30D consumer tax credit. So the new clean vehicle tax credit. So this is the one that is $7,500, but with a bunch of caveats. And you know, you mentioned the discussion about, you know, how to handle this relative to solar. So the original 30D credit or the previous version of it had a 200,000 unit per manufacturer cap.
David Roberts
Yeah, can we talk about the history real quick? Because this, this one in some form, has been around for several years. Like, what's the origin? Do you know where it first cropped up?
Albert Gore III
I believe it came about after the financial crisis. You know, I kind of want to double-check that. But you know, back before really anybody was making EVs in the United States or selling EVs in the United States. But you know, go back 15 years. Yeah, the Nissan Leaf, you had the Chevy Volt and then the Bolt. And you know, some of those vehicles were sort of designed to capture the credit, you know, in terms of their. Because it was tied to battery capacity. I won't malign the Leaf in that way. By the way, I'm always happy to see those on the road.
But really, Tesla in 2012, with the Model S, started to produce higher volumes.
David Roberts
Sure. Well, Tesla famously, that tax credit, i t was the bulk of their income for the first many years of Tesla's life.
Albert Gore III
Well, there were the regulatory credits as well from the performance.
David Roberts
Oh, right, yes, right. My mistake.
Albert Gore III
Which would fit that description better.
David Roberts
Yes.
Albert Gore III
But you know, but those, you know, that's an important policy. It did work as intended to — you know, people are skeptical of those types of market-based mechanisms, but in general they work to a certain extent.
David Roberts
Yeah. I want to discuss the caveats later.
Albert Gore III
Yeah, we can get into that.
David Roberts
But, let's get through the credits. There's one on leasing. Is that separate...?
Albert Gore III
Yeah. So, the 45W commercial clean vehicle credit is similar to 30D in terms of the value for light-duty vehicles at $7,500. It also, I mean, it's intended to apply to any commercial vehicle. So all, all the way from ride-sharing fleets and rental car fleets up to medium-duty, last-mile delivery, and Class 8. They're really effective. It does not contain the sourcing requirements, the mineral content, the foreign entity of concern. I mean, 30D has income requirements, MSRP caps, all kinds of sourcing — it's the most stringent credit on like five different. The most stringent and the most vulnerable for some reason.
David Roberts
But it's the one that has "Manchin was here" spray-painted on it.
Albert Gore III
Correct. And it's essentially doing what he wanted it to do.
David Roberts
But wait, so the commercial credit has none of those, it's just any, any EV?
Albert Gore III
Correct. And it really is intended to incentivize commercial entities putting vehicles to commercial use.
David Roberts
Right, fleets?
Albert Gore III
To buy EVs, yeah. A lot of fleets are light-duty vehicles, but also for these delivery vans, last-mile delivery, and freight. I mean, a huge deal. It became the subject of really intense criticism because the way the law is written for a consumer who leases a vehicle, the taxpayer who buys the vehicle from the OEM is the leasing trust and they thus are eligible for the credit because they are putting the vehicle to commercial use by leasing it out to customers.
David Roberts
Oh, is that where the leasing thing comes from? It's in the commercial vehicle credit.
Albert Gore III
Correct.
David Roberts
This is why everybody's leasing vehicles now instead of buying them, because you can still get the credit through a lease that you can't get by buying it.
Albert Gore III
That's right. If you don't qualify for 30D, either as a taxpayer or because the vehicle isn't totally compliant, then you can lease. So, I think that's pretty vulnerable. Senator Manchin certainly didn't like that interpretation.
David Roberts
Yeah, can we — I don't want to get into a rabbit hole on this, but quickly, like Manchin says, this was a deliberate attempt to get around the restrictions in the consumer tax credit. Do you think it was? Like, do you think that the people who designed this knew what they were doing and knew that leasing would be this kind of loophole that would let a lot of cars through?
Albert Gore III
What I'll say is, if you ask, you know, the authors of the bill, they will say it's being implemented as intended, as drafted. I also think that the bill text, you know, now law text, doesn't really allow for any other interpretation. If I lease a car, I don't own it.
David Roberts
Right.
Albert Gore III
The owner is the commercial entity that is leasing it to me, which is the commercial use.
David Roberts
So, you've got the manufacturing, consumer purchase, commercial purchase. And is there one related to used EVs? Is that separate?
Albert Gore III
That is separate. Yeah, that's the 25E credit. And that has even lower income requirements than 30D and a much lower MSRP cap. I think the MSRP is 25k on that one. So, it's a great credit for expanding access and particularly with a lot of used EVs coming into the marketplace. And really, it is only available to people who, I think, earn under 75k a year in income. They're still going to be vulnerable. But, you know, that's what that credit is. It can only be taken once per vehicle.
David Roberts
Oh, interesting.
Albert Gore III
But it's a good credit.
David Roberts
Yeah. Am I hallucinating, or is there one on chargers, specifically on EV chargers?
Albert Gore III
Yeah, that's the Alternative Fuel Vehicle Refueling Property Credit. Just call it the charging credit. It's 30C, also a really important credit for lowering the upfront costs to install chargers. The stakeholders for that credit are, you know, pretty widespread in terms of municipalities and places that really are excited to get new charging installed, particularly charging that isn't going to be really highly utilized right away. The most difficult economic case is accounting for the time between when you install a charger, particularly like a fast charger, and when you reach high enough utilization that you're recovering all of your fixed costs.
David Roberts
Yeah, I mean, that's a dilemma facing every single charger. Right? I mean, sort of the entire industry is kind of in that weird lacuna state right now.
Albert Gore III
That's right. Because, you know, the utility needs to be able to deliver 150 or 250 or 350 kilowatts to each of those posts whenever it's demanded. So there's a cost to that. And if it's not being utilized, you're not really absorbing any of that cost. So, you can build a bunch of Level 2 chargers and then leave them sitting there, and it's not going to cost you a whole lot. But Level 3 chargers need to be utilized. And so, taking a little bit out of the upfront costs goes a long way to get more of those chargers in the ground in places where they're needed.
David Roberts
All right, so we got manufacturing, consumer purchase, commercial purchase, used EVs, and chargers. That's five. Is that all the EV-related tax credits to your knowledge?
Albert Gore III
Almost. There's one more that is less well-known, less publicized, but the Qualifying Advanced Energy Project Credit 48C is an investment tax credit. And it is an important part of our industry. I don't think it's on the chopping block in the same way that some of the others are because, again, it's an investment tax credit. But we'll add that to the list. These are the credits we really work on.
David Roberts
Okay, so let's then talk about which out of those, you know, there's so much chaos going on, there's so many people saying things. So let's try to just kind of like reveal —
Albert Gore III
That's an understatement.
David Roberts
What are the concrete threats here? Like, which ones of these has someone in a specific position of power said something specific about, like, which ones of these are you worried about politically? All of them? Are there one or two? Or do we even know enough to know that much yet? Sort of like, what's your threat assessment here?
Albert Gore III
Yeah, well, it would be naive to say that I'm not worried about any one particular credit because I think each of these credits has merits and they make a lot of sense. I think I've recited your summary of the history of policy from the BTU tax to the cap trade to the carbon tax. And here's why the IRA exists. I loved it. Actually, there was, I got to tell you, there's one time I was, I was like, mid-spiel and somebody goes, "I think I listened to this dude, Roberts," and I was like, "Oh man, you got me."
I was like, "Yep, nope, that's the one."
David Roberts
Yeah, all the logic, all the policy logic for why IRA was a desirable thing. I mean, despite the chaos and insanity of our times, all that logic is still there. It all still makes sense, you know what I mean? Like it's all still chugging along in the background.
Albert Gore III
Yeah, absolutely. I mean, cap and trade was designed around reducing emissions, and Build Back Better was designed around getting as many EVs on the road as possible. I think industrial policy — which I reframe as federal investments in the industrial sector — there's broad agreement that the United States as a country needs to think about big issues of national importance, such as looking at what's happening in the world. Can the United States remain not just a global competitor, but a global leader in manufacturing of advanced technology? And we certainly can from an R&D perspective, from, you know, an entrepreneurial perspective. The United States has a lot going for it.
We have great capital markets, we have a great education system. A lot of people come here to start companies and succeed. So, federal investments in things like battery manufacturing, mineral production, refining, battery component manufacturing, and vehicle manufacturing, those are non-controversial.
David Roberts
Yeah, no one's arguing. Yeah, no one's arguing against any of this currently based on the old kind of conservatism, the old small government libertarian conservatism. Like, I don't really hear those arguments against IRA insofar as you hear any arguments against it.
Albert Gore III
I think the libertarian perspective on industrial policy is complicated, I think. And there are a lot of really smart folks that I like to read, like some folks at Cato, that have, I think, good criticisms of how to make these things better, more effective, you know, so it's not a pure conservative idea to do this. But it is a sort of — it's an approach that I think works when you're connecting it to things of national importance that people really do agree about. And also, you can connect it down to the local level, whether it's in a red district or a blue district.
Towns like Savannah, I was in Savannah this week, or, you know, the area around Phoenix, Memphis, or Chattanooga. These are places that need investment, they have the workforce, and it's a worthy federal investment to say, "We're going to, as a country, decide to make this sector as competitive as possible with our chief global competitor in this arena," which is not operating on a market-based system, is setting global commodity prices in the global commodity market, but oftentimes below the cost to produce the commodities. And that significantly negatively impacts the ability to finance projects outside of China's sphere of influence. So there's broad agreement about the need to do something about that.
To get back to 30D really quickly — I don't know if I even mentioned 30D at the start of this, but you asked what's the most controversial credit.
David Roberts
30D is the consumer one?
Albert Gore III
Yes.
David Roberts
And as far as I know, is that the only one that Trump and his people have specifically called out as targeting, or have they explicitly said anything about the others? Like, do we know, do we have a handle on which of all these credits we discussed they're actually going after?
Albert Gore III
Well, I would say that from the administration and even going back to the campaign, it wasn't really that specific on tax credits. Things were generally sort of lumped together, and the vast majority of, I think, the political weight associated with EVs was the regulation. So the new light-duty emission standards, the heavy-duty standards, the CAFE rule, and the ACC2 waiver, or in general, California's waiver to set its own air quality standards. So the rulemaking period for the EPA rule on light-duty was long. It's like 11 months between 2023 and early 2024. And it was just — it created a real intense battleground around, you know, legacy OEMs, EV OEMs, oil and gas industry. And it was right as this, right as the presidential campaign was taking off. So there hasn't been like a zeroing in on any one credit.
David Roberts
Although I have heard Mike Johnson say these are — I mean, he is lumping them all together — but he's saying these are wasteful. You know, these wasteful clean energy credits are just wasting money and raising costs. So he at least is saying things that make it sound like he wants to go after all of them.
Albert Gore III
For sure. At the Congressional level, there's more specificity around.
David Roberts
Yeah. This brings me to my next question, which I think is particularly salient these days, which is, how would you revoke these credits if you wanted to? Am I right in saying that in a sane, normal, constitutional world, Congress has to do this right? Congress has to pass a new law saying, "The credits we passed, we're unpassing them." That is, as far as we know, what has to happen to get rid of these. Is that right? Like, Trump can't just kill them. I mean, legally, he's killing lots of stuff illegally, but he can't legally just kill them, is that right?
Albert Gore III
Well, it depends on the credit. But we could get in detail on what the executive branch could do to effectively neuter the 30D or the 45W credit.
David Roberts
Oh, even if it's on the books, you think they can still screw it up?
Albert Gore III
I think 45W would be a bit harder because of the bill texts. But 30D — so the new clean vehicle credit, the $7,500 credit — went through a very long implementation process, and it was actually incredibly well done, I think, and very stringent. But a lot of interpretation between, you know, Treasury and DOE with regard to how do you define eligible, you know, critical minerals or qualifying critical minerals. And where do you draw the line in a process that starts at, you know, rocks coming out of the ground, getting sort of processed into powder and going through a lot of different chemical processes.
And at some point, you know, there's a slurry that's sprayed onto a wafer, and the wafers get stacked, and then it, you know, eventually becomes a battery cell. But the way the law was written, it had battery components and critical minerals, which are subject to different requirements. And there was a new category of constituent materials. It's not in the law, but it made sense for the implementation. So there's a way for the administration to go in and mess around with that stuff through rulemaking. But I don't think that that is likely. I mean, for one reason, I think we're looking right now at sort of an unfolding jurisdictional fight between the House and the Senate as to who is going to, you know, have the pen to move these priorities forward.
So, you have, you know, Senate budget resolution, House budget resolution. Tax policy has to originate in the House in Ways and Means and the Ways and Means Committee and several other committees. Going back to the middle of last year, they were already soliciting input and trying to draft a tax reform bill. I mean, they've been thinking about this for a long time.
David Roberts
Well, it's the one thing they reliably do when they are elected: cut taxes for rich people. All the other things they say, you never know whether it'll happen or not, but that is definitely going to happen.
Albert Gore III
Well, and, you know, this tax bill in particular is a big one.
David Roberts
And we should say, just for context, they've made a lot of promises about cutting a lot of spending. And anyone who knows the federal budget very well knows that there just aren't a lot of places to find spending to cut. It's certainly not popular places. So, they're looking everywhere to cut spending. So, that is a lot of the sort of context and talk around this is like, "Where can we cut, oh, look, here's a bunch of subsidies to clean energy. We can cut those." They wouldn't, we should say, save all that much money in the grand scheme of things.
Albert Gore III
But, you know, this gets into the minutiae of like House rules versus Senate rules. But there is a rule in the House under the Republican majority that, you know, no bill should be introduced that has new spending that isn't offset. And so, from that perspective, Ways and Means doesn't want to introduce a tax reform bill that doesn't have all of the new spending offset. It remains to be seen how much of a guiding force that's going to be for folks in the Senate and in the White House who I think want to make sure they move this tax reform bill forward because the House has a very slim majority.
And, because of the impact of industrial policy, I'd say, particularly in our industry, even though we're in the crosshairs, but across multiple different clean energy technologies and others, there are tech-neutral credits. They're having a big impact and people really believe in them. And then, beyond that, from the business community, their message has been, 'We as a group just committed hundreds of billions of dollars in investment in the United States in reliance on this policy. So please don't just repeal the entire thing.' You've seen a lot of statements to that effect.
So, this is what I was referring to in my first statement about the intro. I think there are a lot of folks on the Hill that certainly get that.
David Roberts
Well, I want to hear your argument — I mean, this is, I think, the core argument of this pod. The whole kind of point of, I think what's happening in D.C., you know, with all the usual caveats, is I think a lot of people on the right are thinking, "We've got to cut something. The manufacturing tax credit is sending money straight to red states. So we'll just cancel the consumer one because that looks like it's just hitting a bunch of upscale libs who buy EVs," right? But your argument is that the consumer tax credit and the manufacturing tax credit are connected and the consumer tax credit is driving investment in manufacturing capacity.
It's not just, you know, it has industrial policy implications beyond just, you know, giving money to wealthy people. So, to lay out that argument, because I'm sure this is what you're saying to Congress people when you talk to them.
Albert Gore III
Yeah, absolutely. Thank you. I mean, I think there's an understanding of the consumer credit that's a bit outdated. It's sort of rooted in this pre-2022 world where any EV qualifies for the $7,500 tax credit. It was capped. So, Tesla and GM hadn't taken any credit since 2018 because that's when they hit the cap. But you know, the initial proposal in Build Back Better was just to restore that without a cap to turn over the vehicle fleet as quickly as possible. That has coincided with just this enormous growth in the Chinese vehicle market, the Chinese battery market.
So, Senator Manchin, as you mentioned in the interregnum where the IRA looked like it was dead, but really it was being fine-tuned into this China-competition US-onshoring bill that it became, and 30D is the most fine-tuned example of that. So, Senator Manchin took a credit that would apply to any EV and basically said, "This is only going to apply to EVs made in North America." So, vehicle assembly has to be in North America and in practice right now that's almost entirely the US, there are a few EVs made in Mexico. But beyond that, we're going to put an income limit on who can take the credit.
So, if you're making, I think, it's more than 140,000 a year...
David Roberts
Household, not just individual? Household.
Albert Gore III
No, that's individual.
David Roberts
Oh, is it?
Albert Gore III
Yeah, so sorry. It's 150k for individual filers, 225k for heads of households, and 300k for married couples filing jointly.
David Roberts
Got it, got it.
Albert Gore III
We're going to put MSRP caps on $55k for sedans, $80k for SUVs, and then escalating requirements for critical mineral and battery component by value in the vehicle battery. So that started at 40% of the critical minerals by value needed to come from the US or an FTA country, and 50% of the battery components needed to be assembled in North America. Manufactured or assembled in North America.
David Roberts
Cumulatively, those are incredibly tight requirements which had the effect of excluding most of the, you know, most people in most EVs. It ended up narrowing the thing considerably.
Albert Gore III
It narrowed it quite a bit. I mean, no foreign-made EV qualified and no sedan over 55k qualified, and frankly, SUVs over 80k, which you know, at the time there were just a few. Now, there are more coming into the market that qualify. But you know, the idea that this is still just subsidizing purchases for rich people is false. It's outdated. But what's been most important is these critical mineral and battery component requirements because they start at 40 and 50% but they go up to 80 and 100% in fairly short order. I'm talking like seven, eight years.
So, what that did is it created a huge motivation and wave of investment by automakers in moving supply chains and developing new supply chains either in the US or within FTA countries for critical minerals. And in order to continue to meet those escalating requirements. So, every year it goes up 10% until it gets to 100% of battery components and 80% of critical minerals. The other thing, and this is the major hammer that comes in, is in January of 2024, the foreign entity of concern rule went into effect for battery components. So, no battery component could have been manufactured or assembled by a foreign entity of concern.
So, no Chinese company, either in China or abroad, could manufacture a component for an eligible vehicle. It disqualifies the whole vehicle if there's any ineligible component. And in 2025, so just, you know, last month, the same rule for critical minerals went into effect. So, no mineral extracted or processed by a foreign entity of concern in China or abroad. It would take a long time, but they created very, very thorough and strict definitions of what happens if it's a JV, what happens if there's a licensing agreement. They really took their time, thought it through, and made it work.
I mean, the intent was for none of this revenue to go towards helping China build up its dominance over this part of the upstream supply chain.
David Roberts
The way to look at it then is, if 45X was a subsidy of manufacturing supply, 30D is meant to create a demand pull for that same manufacturing. Both of these are required to pull the manufacturing in here.
Albert Gore III
That's exactly right. And you know, people ask me all the time, "What's going to be the impact of the repeal of 30D if it's repealed?"
David Roberts
Indeed, I was just about to ask you.
Albert Gore III
So, in general, the question is, what's going to be the impact of that on EV deployment in the US? And there, there are estimates around that, you know, 30% decline, etc.
David Roberts
A 25-30% decline in EV sales in the US is what one big study found.
Albert Gore III
Correct. And that matters a lot to me. It doesn't matter a lot to the folks that I'm really trying to convince of the merit of this credit. But what the real story is here is the main impact of 30D repeal is not to vehicle OEMs or consumers, although it is going to put upward pressure on prices for EVs to consumers. The real impact, the biggest impact, is on the mining sector and the battery component sector in the US and among the trusted trade allies of the US that are all working together to try to catch up to China, which has spent 15 years doing its own type of policy, which is very different, but certainly has the demand pull.
And so, for companies that are in the lithium space, in the cobalt space in the US — the US does have domestic cobalt production that's actually being done responsibly but is now shut down because the price of cobalt is sort of artificially suppressed below the price that would actually support operation at that facility in Idaho. And we see this with lithium projects as well. These aren't the old, you know, the mining projects from 50 years ago. These are really, you know, established companies trying to do it the right way and trying to serve US demand for these minerals.
David Roberts
And we should say that starting a mine is not like, I mean, it's not even like building a factory. It's a long-term, capital-intensive kind of thing that you're only going to do if you feel very confident about the demand on the other side.
Albert Gore III
That's exactly right, exactly right. You can have the best resource in the world. It's still going to take a massive amount of upfront capital investment and finance. So, you've got, you know, your financing costs that you carry for, you know, through the permitting process, through the NEPA process, maybe five years, seven years, through a litigation process.
David Roberts
Yeah, what do they say? The average is like 10 to 13 years or something to get a mine up and running. Which, we could talk about how helpful is that even going to be to the US. I mean, trying to start mines quickly is maddening.
Albert Gore III
There are some things that I think we can do to improve that process as well. Also, you know, restore the trust in the regulatory process and social license and all that. But when you are investing on an estimated commodity price for, let's say, lithium, the global lithium market is a commodity market, but it's a highly illiquid market. And China produces a lot of lithium and, more importantly, refines a lot of lithium. Three quarters of the lithium in the world comes out of Australia and the Atacama Desert area, Bolivia, Argentina, and Chile.
But, you know, the majority of it is refined and processed into battery-grade lithium in China.
David Roberts
It's like in the high 90s percent, it's like 98% or something absurd like that.
Albert Gore III
For lithium, it's a little less than that. For graphite, it is.
David Roberts
Oh yeah, it's graphite I'm thinking of.
Albert Gore III
Nearly 100%. But, so how do we solve that problem in the US? Actually, the new clean vehicle credit is the most effective policy we've ever had at attacking that problem because domestic producers, and you know, this extends down the supply chain, have offtake agreements based on the value of the credit with automakers. GM invested $650 million directly in Lithium Americas Stacker Pass project. Albemarle has offtake agreements with many different automakers. Ioneer has a joint venture with Ford for refining.
LPO has been very active in this space as well. It's a whole other topic, the importance of honoring those commitments from LPO. But that is contingent on this demand signal that is telling these companies that have resources and the ability to deliver, basically the engine of the clean energy economy, we want it to be here.
David Roberts
I want to talk about, sort of, what is the disposition of Congress on this? You know, which might be sort of different than what people say for the microphones. I wonder, do you think that this connection between the consumer credit spurring manufacturing investment, this idea that the manufacturing tax credit and the consumer tax credit are of a piece, are an ecosystem, both of which are required to spur the manufacturing. Do you feel like that's well understood in Congress? What's your read on — I mean, trying to predict anything is a fool's game these days — but what's your read on Congress's disposition on this?
Is there enough undercover support, undercover understanding of this that you think it's going to survive? What's your take on Congress right now?
Albert Gore III
Well, the short answer is no, I don't think that it's well understood. But I do know that there are many people who do understand it. This is where, you know, the 30D credit in particular suffers from the just baked-in political weight of the campaign and the conflation of any EV policy with the EPA rules. You know, the message is like, "The government shouldn't tell me what car to buy. They're going to take away your gas cars." I mean, that has absolutely nothing to do with the 30D credit. But it's an easy talking point.
And what we're seeking to do is just bring it back down to the local level. So instead of talking about it conceptually, which is important, showing people the economic impact not just in making cars, but making every part of the supply chain. So we've been trying to host, you know, business roundtables. We did one in Phoenix, in the Phoenix area last year. We put, we had a bunch of folks get on an electric school bus, drive 60 miles outside of Phoenix to the Lucid factory, took a tour there, went to a copper mine next door. You know, we had a series of discussions at Salt River Project's headquarters there in Tempe where, you know, we're talking about grid issues, we're talking about the sort of standalone battery manufacturers that are in the region as well.
But trying to make it as clear as we can to folks, "If you think about an EV, think about all these jobs in Arizona." And you know, we were in Savannah this week with Congressman Buddy Carter who I think understands these issues about as well as anybody in the Republican caucus. You know, Hyundai's in his district, LG has a joint venture there. There's a really thriving domestic solar manufacturing industry in Georgia. And you don't have to go far. You go up to North Carolina and there's a huge lithium asset there that Albemarle is developing. You've got in Chattanooga, you've got domestic synthetic graphite made by Novonix.
They've got offtake agreements with every automaker. And, you know, you've got SK making batteries in Commerce, Georgia, going to Chattanooga, put into VW ID 4s, and, you know, showing the value chain and the jobs and the economic impact represented across all these small towns. Commerce, Georgia is not a big town. Yeah, Savannah is not a huge city. But $7.5 billion invested in EV battery manufacturing there, that's a huge deal for that community. And Congressman Carter made this point very well. It's not just $7.5 billion. It's that much or more in indirect economic impact because you got to have all of these things: housing and every service that a community needs that provides jobs.
So, connecting that in as many towns as we can across the country where we, you know, our companies have a footprint in Ohio, Michigan, Tennessee.
David Roberts
I don't know if this would be any use in an argument with a congressperson, because it's a little bit more abstract, but also there's just like the US promised you X amount of money, you came in and invested several hundred million or a billion dollars, and now in the midst of your investment, we're going to yank it away. They're just like at a certain point, the trust — you know what I mean? Like, capitalism relies on trust in a lot of ways. Like just viewing the US Government as a stable partner, viewing the US as a stable investment, you're going to lose all that eventually if you keep offering things and yanking them away and proving yourself so inconstant. Like that has ambient effects on people's willingness to invest in your country over time.
Albert Gore III
That's right. And I think there are a lot of people that get that. You know, the pressure to cut things, you know, and this isn't specific to EVs, but it has a specific flavor when we're talking about EVs, you know, it's a real thing. There are deficit hawks, there are folks that are genuinely concerned about the debt and see this as an opportunity to do something about it. So, you know, the analogy would be, you know, if you're running a company and, you know, your choice is bankruptcy or cutting a significant amount of your cost structure, you have to cut things that are good and you wouldn't otherwise cut, but you feel an obligation to do it as, you know, in your fiduciary, to your management duty. So I think there are folks that are really coming to it from that perspective.
David Roberts
And also, can I just throw this in there too? Because this is like a hobby one for me. Like one of the premises of sort of right-wing economics, conservative economics, is that tax cuts pay for themselves, right? The idea is like you cut taxes on someone, they become more productive, they make more stuff, they therefore generate more tax revenue than they otherwise would have and you end up with more money than you started with. Why wouldn't that exact same logic apply to tax subsidies like this? They pay for themselves. You're subsidizing a factory, but then the factory is up and running and all the jobs and indirect jobs and all that tax revenue is going to amount to more than you paid for the subsidy.
Like, it's the same logic on the other side. I don't know why they treat them differently.
Albert Gore III
That's where it really does have to do with EVs and the politics around them. I mean, there are, you could call them tax subsidies or call them federal investments in the tax code all across other industries that have been there for 50 years or more and they're so baked in that you can't even really find them all and aggregate. People do studies on this, particularly in the fossil fuel industry —
David Roberts
At a certain point, when a subsidy has been around long enough, you sort of stop calling it a subsidy. Right? I mean, it becomes like architecture, it becomes infrastructure.
Albert Gore III
It's just there. But it lowers the cost of an industry to do business, which produces more jobs and more revenue and all that. So, this is a new one. But I like to talk about it in terms of, you know, what's a worthy federal investment? A federal investment in a community that has a multiplier effect and creates benefits far beyond just the value of the federal investment. That's a good investment, particularly in this industry.
David Roberts
Another question about whether this is a good investment or not. Like to me, it seems sort of dead obvious that EVs are going to triumph in the long term. Like that just, I hardly see an argument around that. It's just, we're just arguing about the time horizon, right? But you know, I take that for granted. Do members of Congress take that for granted? Like you hear, you know, like they used to talk about reviving coal, which was ludicrous. Like, do they understand that this is in some sense an inevitability and that you got to get on this train at some point or do they really think that this is a fad that they can sort of head off?
Do you have a good sense of that?
Albert Gore III
Well, I think there are other stakeholders that certainly make the case that, you know, EVs are going to go away. But the industry estimates, I mean, Cox Automotive has no agenda when they estimate that, you know, 80% of people will be considering EV by the beginning of the next decade. I think that's more rooted in, like, looking at EVs just as another car. So if you have a comparable EV and a comparable ICE vehicle, you know, what do they estimate the rate is of people that will choose the EV? So, you know, and you can look at other countries that don't have the same type of politics, don't have the same domestic, you know, energy production politics around oil and gas and all that stuff.
You know, EVs are viewed far more as just cars in the market. But I do think that, you know, there is a disconnect between what's actually happening with EV adoption in the United States and the understanding that folks that represent communities that don't have significant deployment of EVs, and they really haven't seen it. I mean, there's a social proof effect. See this with rooftop solar as well. I started in the rooftop solar industry. There's no substitute for, like your neighbor putting solar panels on their house.
David Roberts
They're contagious.
Albert Gore III
Yeah, because, you know, it's one thing to talk to a salesman about it or read an advocate telling you why it's good. Just talk to your neighbor and be like, "What do I need to worry about here?" You know, and then it kind of makes sense. So, I think that the story around EVs has gotten lost. A little bit lost. We're doing our best to try to bring it back to the forefront, but, you know, some of the campaign messaging was like, "These things are all made in China."
David Roberts
Yes, this was what Mike Johnson said, "We're putting money in China's pockets." Like, did you not read the tax credit that your own Congress just passed? It was like a year ago.
Albert Gore III
74% of EVs sold in the US in 2023 were made in the US.
David Roberts
Yeah, people do not get that. I'm about to get an Ioniq 5, which I'm ludicrously excited about, waiting for it to show up at the dealer.
Albert Gore III
Made in Savannah.
David Roberts
Yeah, it was made in Georgia, I think.
Albert Gore III
Yeah, I was just at the site where they're making it. It's got an LG battery.
David Roberts
Yeah, people do not get that. One other substantive question on policy: it seems certain that the EPA is going to go after climate regulations, including mobile source climate regulations. So, there are two ways they could do that. One, they could just run a new rulemaking procedure and weaken the fuel economy standards that were just passed last year. Or, if they wanted to go big, wanted to go nuclear, they could go after the endangerment finding, which is the premise of all carbon regulations at the EPA, which just says, "Hey, CO2 is a dangerous air pollutant." In terms of effects on the industry, how do you rate that threat relative to the threat to the tax credits? Which of those two policies do you think is driving more actual change?
Albert Gore III
Well, on the endangerment finding that was in one of the executive orders, it's certainly a huge concern, but it was settled law at the Supreme Court: Mass versus EPA. I think that would be a much larger fight. You know, the EPA rulemaking that culminated in 2024 really did take into account a lot of industry feedback. And, you know, the innovators actually intervened in support of it. And when there were petitions for review filed, so did we. But I think they'll certainly advocate for something that is less stringent. They would say it provides more flexibility and lets consumers lead the way.
That's sort of the message. But I think that there will be a desire to avoid what happened seven years ago where the EPA rolled things back so far, farther than the industry wanted, that it kind of bifurcated the industry. They went after the waiver and you had automakers, you know, opting into an agreement with California on air quality standards even without the waiver, based on the expectation that it would be restored. So I think there's a little bit of fatigue around that. I mean, at the end of that four-year period, legacy automakers had, I think, kind of been in limbo and Tesla had the whole market to itself almost, and by the end of 2021 was like a trillion-dollar company.
Because if you're serving a market that industry analysts estimate has significant demand and don't have a lot of competition, you're going to do very well. So, I think there's the market pressure underneath all of this. That if you believe the folks like Cox Automotive and Bloomberg New Energy Finance stuff to estimate based on everything they know about consumers, that a lot of people are going to like these cars, whether they're Democrat or Republican or libertarian, they're just cars and people like them, then, you know, you really need to be moving in this direction if you want to compete.
David Roberts
Yeah, this is the other thing I want to know because you talk to auto companies presumably frequently, and I'm sort of curious whether they buy this argument, which is just that, even if the US Government takes the pressure off you right now and for the foreseeable future, the market is moving towards EVs. And while you're mucking about hoovering the last bit of money you can get out of giant gas SUVs, Chinese automakers are establishing dominance in this market. So, it's incredibly short-sighted to do this one way or the other.
Eventually, you're going to have to compete in this market. And the longer you wait to get started on it, the longer of a lead Chinese companies have. It seems like if you're a US automaker, that ought to be compelling to you. But then, I'm not a US automaker, so what do I know? Like, do the US automakers understand that?
Albert Gore III
Absolutely. I think that's driving a lot of investment. And I think the EPA's mandate is not to determine what kind of cars people make or drive. The EPA's mandate is to look at the current technology, the current trends, and reduce pollution based on what's feasible. And so, they created a rule that would have reduced tailpipe pollution. It would have cut it in half by 2032. And you know, the final rule gave a lot of flexibility with regard to what kind of powertrains, you know, can be used for that. And you know, plug-in hybrids. A plug-in hybrid that's got 80 or 100 miles of range is very different than one that has 20 miles of range.
David Roberts
Yeah.
Albert Gore III
And so, there will be certainly a rule for that. And then you've got, you've even got some new technology that has been deployed in China. Now, a couple of US companies are looking at it with an onboard range-extending generator.
David Roberts
Yeah, those are intriguing. I can't decide where — can't decide where I come down on that. I mean, just based on first principles, you have to believe that like a car with two separate propulsion systems is, it's not going to win in the end. Like that's —
Albert Gore III
I mean it, it still, it just has an electric motor, the generator —
David Roberts
The generator charges the electric motor.
Albert Gore III
Correct. So, you have, you'd have like 300 miles of range on your battery. And then, I think in theory, the generator can extend that to like 600. I mean, BYD has vehicles like this in China.
David Roberts
Yeah, those seem like a killer app. Why are we not have a single one of those available to this market? Like a plug-in hybrid EV that would go 80 to 100 miles on electric and then could switch over to gas is the sweet spot right now for the US market and it's not here. Like, you can buy one of those in China today and you cannot in the US today. What the hell?
Albert Gore III
Yeah, and speaking of kind of abandoning, I mean, the US used to export a lot of cars. GM was the biggest company in the world, you know, middle of last century. And I think as demand for EVs has been proven, you know, we look at places like Central America, Latin America, you know, BYD's got cars for sale for $20,000.
David Roberts
And the two- and three-wheelers, you know, two- and three-wheelers are going electric faster than any other category.
Albert Gore III
The Chinese share of the EV market in, you know, many of those countries, is going to be 90%.
David Roberts
Yeah.
Albert Gore III
You know, so we need to move quickly. We really need to move in this direction. Do everything we can. Use every tool in the toolbox, and that includes the federal investments in the tax code, that includes LPO. If it's working, it ought to be retained. I mean, I think that there are a lot of folks on the Hill.
David Roberts
So simple, but so out of step with our tax.
Albert Gore III
Yeah, I mean, you know, you have to understand the top-down pressure to cut spending and then the political pressure to go after EVs is pretty significant. But there are plenty of folks who understand that and are willing to say, "If it's working, we ought to keep it." And so what we're trying to do is just give them the ammo, say, "Here's exactly how it's working. Here's a picture of how it's working. Here's a video. Here are all the people that are working here and they are really excited about this." And the great thing about the supply chain, from critical minerals to battery components to recycling to EV OEMs, charging companies, and utilities, the workforce across all those sectors is 7 million.
It's crazy. Across the entire country, there's a built-in constituency that is just all in on this. And when you're talking about investments that benefit the country overall and also our lifelines to these communities that really want the jobs and the economic opportunity, but also are really excited. They have a stake in this project of national importance. The same with the chips manufacturers. I mean, that's a huge deal. There are lots of people that recognize the strategic importance there for the country overall. If you take any political feelings out of it about EVs and folks who just haven't seen a lot of EVs deployed in their community yet, it's a no-brainer for a lot of people to say, "Yeah, this makes sense."
David Roberts
I mean, find me an EV owner on the planet who would go back to a gas car.
Albert Gore III
In surveys, you know, 90%. P eople really like these cars. They're fun to drive. You know, you can plug in anywhere. I still have friends who have not installed Level 2 chargers, may come down to my house if they've got to take a road trip. But like for their day-to-day commute, they're just recovering, you know, 30, 40 miles.
David Roberts
Yeah, we have a Level 2 at our house, but I probably, we probably charge our EV like once every two weeks. Everyone overestimates, you know, how much range they're really going to, practically, practically need. So, like, these are like a good product. It's popular, it's driving jobs, the policy's working, it's got bipartisan support. In a normal, sane and normal political world, that would give us confidence that these credits will survive. I guess the question which neither of us can answer is, are we in a normal political world and just how abnormal is it?
I guess we'll find out. One final question I want to ask you before I let you go. If the feds kill this tax credit, we know that some states have EV tax credits. Is there any real prospect that, like a coalition of states, say like the same states that are on California's EPA waiver, which by the way is also on the chopping block, but like the same states, if they all got together and said, "We're going to sort of replicate the federal EV tax credits, we're going to include our own domestic sourcing requirements." Like, could a coalition of states accomplish anything close to what the national credit is doing?
Like, could they compensate for the loss?
Albert Gore III
Yeah, it's a really interesting idea. You know, there are a collection of states that have had either a sales tax exemption or an EV rebate. When you're at the state level, state budgets are sometimes more challenging. Some states have legislatures that meet every two years. I mean, it's difficult to create a funding mechanism that is steady enough. But I think the idea to replicate the requirements within 30D is an interesting one. It would stretch the money out a bit longer. I think that states are committed. We call them Section 177 states that joined California under that section of the Clean Air Act. But that's about EV deployment. It really is the role of the federal government to make investments that benefit the entire country, particularly in this global competitiveness, national security, supply chain security, and building up our trade partnerships outside of China so that we can really own the future of our advanced technology deployment and our transportation sector.
It's a really, really important thing that this is what the federal government is supposed to do. Because you're talking about a demand signal for products that may be in any of the 50 states, but that is pulling investment into, you know, Tennessee and Georgia, South Carolina. Asking another state to do that — it may be something that comes into effect. My hope is that there are enough folks that do understand this. They really understand the importance of future US global competitiveness. A lot of folks, you know, they have a set of China talking points, but putting the data on the automotive sector and the battery sector in front of them as a basis for support of these policies, I think, sometimes has a profound impact.
David Roberts
I mean, if your whole political personality is China, China, China, this should be like table stakes. If you want to compete against China, this is it. This is where they're dominating. These are the industries they're dominating. So, like, if you want to compete with them, you got to dominate. You got to compete in these industries. You know, it's just like, math.
Albert Gore III
That's right. This isn't — the 30D credit isn't Joe Biden's credit. It's Joe Manchin's credit. And that's his whole deal.
David Roberts
Oh, I hate giving that man credit for anything.
Albert Gore III
You got to give him credit for the IRA.
David Roberts
Do I?
Albert Gore III
Yeah.
David Roberts
That's a different pod. All right. Well, this has been fascinating. You know, it's always difficult to talk about these things when in the surreal environment we're in. But I think anyone who listens to this pod will have to acknowledge that sense is on the side of these credits, like policy logic is on the side of these credits, even raw political self-interest of Republicans legislates in favor of these credits. So, like, if we are in anything like a sane world, I think we should probably be pretty confident that the credits will survive. Is that fair? I'm scared to say that out loud.
Albert Gore III
But I hope so, and in some form. I mean, I think no politician, you know, has a long career when they're voting against huge factories in their district. And you know, more to the point, when you get outside the sort of national political coverage and go talk to folks in their district. Like, a lot of them are from the district. They care a lot about it. They were business owners or they, you know, they were state legislators. I mean, they care a lot about what's happening in the district. And a lot of these places have felt kind of disconnected from the rise of EV deployment over the last decade, but they're coming around to the view that they have a big stake in it because they're making the things, you know, they're producing or refining the minerals or making the battery components.
David Roberts
It's just a question of whether this, whether even self-interest now can overcome the immense weight and ubiquity of national politics. You know, everybody's always lamenting politics has gotten so nationalized that it's like some of these people on the ground level seem to care more about, like, what Target puts on its displays than they do about the economic health of their own district. At least some of those voters, I mean, they're probably over-represented in media, so, you know what I mean? So, we'll see whether self-interest still —
Albert Gore III
Never bet against self-interest.
David Roberts
Oh, well, all right, well, that's a good note to leave us on. And we'll see whether self-interest can triumph in the end.
Albert Gore III
But, you know, it's the interest of the community too. You know, I, I don't want to be so cynical, but yeah, I think, I didn't mean to step on your outro there.
David Roberts
No worries. All right, Albert Gore, thank you for coming. Thanks for walking us through this and good luck talking to these folks.
Albert Gore III
Thanks so much for having me.
David Roberts
Thank you for listening to Volts. It takes a village to make this podcast work. Shout out, especially, to my super producer, Kyle McDonald, who makes me and my guests sound smart every week. And it is all supported entirely by listeners like you. So, if you value conversations like this, please consider joining our community of paid subscribers at volts.wtf. Or, leaving a nice review, or telling a friend about Volts. Or all three. Thanks so much, and I'll see you next time.
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