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A Turning Point in
The United States has taken a sharp detour from its recent climate ambitions following the formal approval of the Trump administration’s new tax and spending bill on July 4. The legislation significantly reduces federal support for electric vehicles (EVs), renewable energy, and hydrogen initiatives—pillars of the Biden administration’s 2030 decarbonization targets. With major incentives being pulled back, analysts expect EV adoption to drop by half and hydrogen investment to shrink, putting both American and foreign corporations—particularly Japanese firms—on alert for a major strategy reset.
the Original
The new legislation aims to slash \$500 billion (approx. ¥72 trillion) in climate-related spending over the next decade, effectively dismantling much of the Inflation Reduction Act (IRA) enacted under Biden. The law terminates the \$7,500 EV tax credit for North American vehicles by the end of September, and it also ends lease-based credits available to non-North American brands. With EVs already more expensive than gasoline-powered vehicles, this move could drastically curtail consumer demand.
Biden had targeted a 50% EV adoption rate for new vehicle sales by 2030. Trump, however, has issued a separate executive order nullifying this goal. AlixPartners now predicts EVs and plug-in hybrids (PHVs) will only make up 23% of U.S. car sales by 2030, far behind the global average of 45%.
Tesla—holding nearly 50% of the U.S. EV market—finds itself in a particularly tough spot. Although CEO Elon Musk initially joined the Trump administration, he later broke away. Tesla’s sales have already dipped for two consecutive quarters, and the loss of federal support could worsen its trajectory.
Japanese corporations are also bracing for impact. Panasonic,
Energy companies like Mitsubishi Corporation and Idemitsu Kosan—partnering with ExxonMobil on a Texas hydrogen-ammonia plant—must now reassess timelines and market conditions before finalizing their investments. The only energy sector spared from cuts is nuclear power, which is expected to support rising electricity demand driven by AI and data centers.
America’s retreat from clean tech may inadvertently boost China’s lead. With over 60% global market share in EV batteries and critical minerals, China’s BYD has already surpassed Tesla in global EV sales for the first half of 2025. U.S. solar firms like First Solar may also struggle as new plants face shutdowns, handing victory to Chinese manufacturers. The new direction signals a strategic pivot that could have ripple effects across global supply chains, corporate roadmaps, and climate timelines.
What Undercode Say:
The passage of Trump’s tax cuts marks more than a policy shift—it’s a strategic reset for America’s climate ambitions. While the bill is framed as economic reform, its largest unintended consequence is the derailment of the nation’s decarbonization infrastructure. The original intention of the Inflation Reduction Act was not merely environmental but geopolitical: to reassert U.S. dominance in the green economy and reduce reliance on foreign (especially Chinese) energy tech.
By cutting the EV tax credit, the U.S. may have handed China an even larger slice of the future automotive market. BYD’s overtaking of Tesla is not just symbolic—it reflects an underlying shift in manufacturing prowess, supply chain control, and consumer perception. Tesla, which had become a symbol of American innovation, now faces weakened demand at home just as its global competitors surge ahead.
The EV setback
For Japanese firms like Panasonic and Toyota, this is a pivotal moment. The withdrawal of U.S. incentives forces a reevaluation of plant investments, production schedules, and product lineups. Toyota’s decision to postpone one EV model and double down on hybrids is indicative of a wider recalibration. Panasonic’s battery output plans might now be misaligned with U.S. demand realities.
The survival of nuclear tax credits, in contrast, reveals where U.S. priorities are headed: toward stable, scalable, domestic power sources to feed the explosive growth of AI and cloud computing. But this comes at the cost of abandoning sectors that could have generated jobs, exports, and climate resilience.
Finally, from a market standpoint, this could trigger unintended consequences. A reduced U.S. presence in renewables means weakened leverage over global green supply chains. This not only deepens China’s dominance in rare earths and battery production but also makes allied cooperation (such as with the EU or Japan) more fragmented.
Rather than simply rolling back a law, the Trump administration may have initiated a structural retreat from one of the 21st century’s defining economic races: clean tech leadership.
🔍 Fact Checker Results:
✅ It is verified that the Trump administration passed a tax bill that slashes \$500 billion in climate spending.
✅ The \$7,500 EV tax credit phaseout has been officially scheduled for September 2025.
✅ AlixPartners forecast confirms a 23% EV market share for the U.S. by 2030, down from Biden’s 50% goal.
📊 Prediction:
If current policies persist through Trump’s second term, U.S. EV adoption will plateau below 25% by 2030, while China could exceed 60%. This divergence may push global automakers to invest more in China or Europe, leaving the U.S. auto industry less competitive and increasingly reliant on foreign supply chains. Expect Japanese companies to hedge their bets—diversifying production away from the U.S. while prioritizing hybrid tech and alternative markets in Asia.
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Reported By: xtechnikkeicom_22268da4ba2cbd0a3e7d08d4
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