Uncertainty over President-elect Donald Trump’s plans for federal tax credits and loan programs supporting American electric vehicle manufacturing could stall Tennessee’s fast-growing electric vehicle and clean energy industries, analysts say.

Tennessee has seen an estimated $12.6 billion in investments in new clean energy projects since the passage of the Inflation Reduction Act under President Joe Biden in 2022, according to an October Washington Post analysis of data from the Massachusetts Institute of Technology and energy think tank Rhodium Group.

The Inflation Reduction Act (IRA) created more than 20 tax incentives for clean energy and manufacturing, marking one of the largest climate investments in American history. No Republican lawmakers voted for the act, but the Post’s analysis found “red” states – including Tennessee – have so far received the lion’s share of investment dollars following its passage.

Low-cost federal loans and tax credits for U.S.-produced batteries and battery components have helped companies stand up more cost-competitive electric vehicle plants in the United States, said Harrison Godfrey, managing director of clean energy industry association Advanced Energy United. The IRA also changed consumer electric vehicle tax credits to incentivize the industry to anchor in the United States; For the credit to apply, vehicles must have batteries made in the U.S. using materials sourced from the U.S. or some allied nations, Godfrey said.

But Trump’s transition team is reportedly planning to scrap the $7500 tax credit for buyers who purchase new electric vehicles, Reuters reported Friday. And the fate of Biden-era clean energy programs remains unclear.

Energy industry analysts worry such a rollback would stymie the balance of producer- and consumer-facing incentives.

“The fundamental thing to understand about that is that the two work in conjunction,” Godfrey said. “It’s not enough just to have one side of that policy … it’s great if we’re standing up factories, but if there’s nobody buying at the end of the assembly line for those components, for that finished vehicle, because we haven’t also helped support that consumption side of the equation … we see great investments that do not actually bear fruit.”

Dozens of bills seeking to rescind parts of the IRA have been considered in the House of Representatives in the last two years, but 18 members of the House Republican Conference wrote in favor of maintaining the IRA’s energy tax credits in an August letter to House Speaker Mike Johnson.

“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the letter states. “A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return.”

Jack Conness, a policy analyst at energy and climate think tank Energy Innovation, points to the letter as an example of the difference between rhetoric and reality in discussions about repealing parts of the IRA. The reality, he said, is that post-IRA investments have had “significant impact on economic growth and jobs” in red Congressional districts.

“Businesses have been operating under the assumption and making large investments in places like Western Tennessee on the assumption that this policy survives,” Conness said. “So when you want to potentially shake this up, it causes total chaos and havoc on the private business side.”

Electric vehicle and battery industries flock to Tennessee

These policies helped boost projects like Ford’s BlueOval City and the BlueOval SK battery plant in West Tennessee. The companies announced the plant’s development in Haywood County 2021. The U.S. Department of Energy approved a conditional loan of up to $9.2 billion to BlueOval SK under the IRA to build three battery plants in Tennessee and Kentucky last summer.

Godfrey said the future of the Loan Programs Office and its low-cost loan programs for EV and EV component manufacturers is a “big outstanding question.”

“If you deconstruct that, if you shutter the office or if you greatly reduce the size, shift that mission, I think there’s risk there that we don’t see additional projects like this funded in the future,” he said. 

But while some factories have secured their IRA loans, the ink isn’t yet dry on loans like BlueOval SK’s, which is still in the conditional phase.

U.S. Rep. David Kustoff’s West Tennessee district has seen $7.9 billion in investment since the IRA’s passage, according to the Post analysis, followed by U.S. Rep. Andy Ogles’ Middle Tennesseewith $2.9 billion.

Both voted against the IRA. Neither could be immediately reached for comment.

Kustoff said in 2022 that the “radical spending bill” would “hurt energy producers” and “certainly worsen inflation,” among other things. Ogles called it a “gross waste of taxpayer dollars.”

Both have said BlueOval City and BlueOval SK will be transformational for the region.

Since 2022, EV component supplier Magna announced it would build the first two supplier facilities in BlueOval City’s Stanton supplier park, and a stamping and assembly facility in Lawrenceburg. NOVONIX Anode Materials announced a new $1 billion battery plant in Chattanooga. Ultium Cells announced a $275 million expansion of its plant in Spring Hill.

According to the Post’s analysis, post-IRA investments have spanned multiple Congressional districts in Tennessee:

• Diana Harshbarger (R), District 1: $17 million
• Charles Fleischmann (R), District 3: $746 million
• Scott DesJarlais (R), District 4: $146 million
• Mark Green (R), District 7: $672 million
• Steve Cohen (D), District 9: $189 million

“This is not a red state, blue state economic development story,” Godfrey said. “This is an all of America economic development and manufacturing resurgence story, and Tennessee is a great example of how this resurgence, this growth, is serving ‘red’ America.”