Regulatory and Tax Policy: A New Challenge for EVs

The electric vehicle transformation hasn’t just sparked competition—it’s also triggered major policy shifts that could reshape consumer behavior and industry strategy.

1. U.S. GOP Proposes New Car Loan Deduction

A proposed tax bill from House Republicans would allow buyers of U.S.-assembled vehicles (2025–2028) to deduct car loan interest—but ending the current $7,500 EV tax credit and adding EV/hybrid annual fees . Analysts warn that tariffs and fees may offset the deduction’s estimated $400‑year benefit.

2. California’s Controversial Road‑Use Tax

California, grappling with declining gas-tax revenue amid rising EV adoption, is considering a per-mile road usage tax . Critics say it burdens long-distance drivers, invades privacy, and penalizes lower-income residents. The proposal is in testing with its future uncertain.

3. Global Emissions Regulations Evolving

In Europe and the UK, a surge in EV sales (28% growth in early 2025) is enabling regulators to soften emissions targets. But environmental groups warn that weaker rules may slow EV momentum. Automakers like VW, Ford, and Mercedes-Benz aim to keep both ICE and EV models on sale to hedge region-by-region uncertainty.

4. Why It Matters

  • EV costs changing: Potential tax cuts might vanish as subsidies are replaced by usage fees.
  • Infrastructure concerns: Road-funding gaps from gas declines could shift to EV owners.
  • Health of EV adoption: Uncertain regulation may stifle momentum, but softening rules could also provide time for grid and charging ecosystem upgrades.