Cuts to EV incentives threaten Nevada’s lithium mining

In Nevada, anxiety is growing around a possible rollback of the tax credits launched by the Inflation Reduction Act (IRA). Against the backdrop of Republicans’ plans in Washington to make deep spending cuts, the mechanisms that support the supply chain from lithium mining to battery production and recycling are at risk.

Congressman Mark Amodei, a Republican and representative of Nevada’s 2nd congressional district, calls preserving the two key credits 45X and 30D the minimum acceptable condition. In his words, this is a red line unless a stronger alternative emerges, while he emphasizes that this is about supporting the supply chain rather than subsidizing the purchase of EVs as a product.

Nevada and its lithium loop in numbers and projects

For Nevada, the dispute over the credits carries a special price: the state remains the only one in the U.S. with an operating lithium mine and is vying for the role of a hub of the domestic battery industry. Supporters of this strategy describe it as a lithium loop—that is, a closed-loop chain of mining, processing, manufacturing, and recycling.

Key elements of this infrastructure are already visible on the state map. Among them are projects that form the foundation for a new industrial cluster:

• Tesla and Panasonic, Gigafactory about 9 miles east of Reno, production of battery cells and electric vehicles
• Redwood Materials in Carson City, recycling of spent lithium batteries and production of materials, including cathode components
• Ioneer, the Rhyolite Ridge project near Tonopah, construction is expected to begin this year
• Lithium Americas, the Thacker Pass project in Humboldt County, construction is already underway; earlier the company secured a $2.3 billion federal loan

The scale of investment sets the state apart even against the backdrop of a nationwide boom. Nevada received the highest federal IRA investment per capita, and the share of clean investment amounted to more than 3% of the state’s GDP in the period from September 2023 to 2024. Amodei’s district is in the top 5 U.S. districts for private investment after the IRA’s passage: $6.6 billion realized and nearly $11.2 billion announced.

The Comstock story as a warning about value added

Regional officials draw a parallel with the discovery of the Comstock Lode in 1864, when much of the value, local lore says, flowed out of the state and helped San Francisco grow. In Nevada, this analogy sounds like a reminder of the risk of remaining a raw-materials supplier while profit margins and jobs concentrate in other regions.

The lithium loop is presented as an answer to the long-standing task of diversifying an economy that for decades depended on the gambling business and tourism cycles. The point of the project is to anchor in the state a full industrial closed loop, where money stays where the resource is mined rather than flowing to processing and assembly centers.

Why the incentives ended up in the risk zone in Washington

Revising tax incentives has become part of a broader budget agenda. The Republican plan requires finding about $1.5 trillion in cuts, and the IRA incentives are seen as an easy target, including because their use turned out to be more active than early forecasts.

Layered on top of that math is the political backdrop. Estimates of the budget cost of the credits have risen noticeably compared with 2022, and the range of effects on the deficit being discussed runs roughly from $700 billion to $1 trillion. Within the right-leaning electorate, cultural tensions around EVs also persist, and critics often describe the incentives as support for corporations and a product for coastal elites.

For their part, energy and auto lobbyists insist that the incentives pay off through investment and localization of production, and also increase U.S. competitiveness against China, where about 65% of EV battery components are produced. At the same time, companies acknowledge that the Trump administration’s push to accelerate critical-minerals extraction could help the industry, but it does not always replace the tax-policy certainty that project financial models rely on.

How cuts to incentives will affect Nevada’s economy

Even without this problem, the state is going through hard times. The construction industry is stagnating, and transportation and logistics are running losses. Even gambling tourism, which was one of the foundations of the region’s economy, is declining due to the rise of online casinos.

Gamblers who used to come to Las Vegas to play are switching en masse to online gambling platforms. They get the opportunity to play where and as much as they want, plus a wider selection of games. More and more exclusive offerings are appearing in online casinos that are not available in brick-and-mortar casinos—from crash games à la Plinko. These are new formats, but they are already in high demand among players. This is also confirmed by data from industry sites in the top search results dedicated to crash games Lucky Jet, Aviatrix, Aviator, Jet X. Representatives of the Jet X game site https://lucky-jet-game.com.in/ told us that the number of players is growing rapidly.

At the same time, the number of players in brick-and-mortar casinos is shrinking, which means the state’s hotel and entertainment revenues are also declining. A drop in international visitor traffic, especially from Canada, further increases pressure on the industry.

Two credits that hold the chain together: 45X and 30D

The 45X credit, the advanced manufacturing production credit, supports the supply side—that is, production and processing. For critical minerals, it allows claiming a credit equal to 10% of production costs, which Lithium Americas, Ioneer, and Redwood Materials rely on. For battery-cell manufacturers such as Panasonic, the credit is $35 per kWh of output; the company estimates that producing about 40 GWh per year at the Tahoe Reno Industrial Complex site yields up to $1.4 billion a year in tax savings, excluding the expansion in Kansas.

For Nevada, the time-horizon nuance also matters: critical minerals under 45X have no set expiration date, and the credit effectively applies for the life of a project unless Congress decides to change it. Against this backdrop, 30D, the new clean vehicle credit, looks more politically vulnerable because it is directly tied to demand. It provides up to $7,500 to buyers or businesses when purchasing an EV and contains the “foreign entity of concern” (FEOC) rule: the credit does not apply if battery components are produced by companies in which a foreign entity of concern, including the Chinese state, owns a 25% or greater stake; the graphite exception runs through 2027.

Although mining companies do not formally receive 30D, it affects their contracts and project economics. Lithium Americas has an agreement with General Motors, Ioneer has a similar arrangement with Ford, and materials producers, including Redwood, see the strict 30D rules as leverage against imported components.

Amodei’s position and the divergence of business interests

Amodei voted against the IRA, but now defends its energy provisions as an economic necessity for the district and the state. He publicly frames the thesis that electric transport and battery technologies have already become the present, and the question comes down to the share that the U.S. and Nevada are willing to hold in this industry.

At the same time, the fate of the incentives, according to participants’ estimates, will be decided as part of a major legislative package that will mix extending the 2017 tax cuts, spending cuts, and other Trump priorities. In such a structure, pressure on individual Republicans increases, because competing demands arise in parallel, from the SALT (state and local tax) deduction to voter-sensitive topics like Medicaid, and the political symbolism of 30D makes it an easy target.

Within the industry, there is no single set of priorities. Miners focus on preserving 45X; at Ioneer, they emphasize that repealing the credit will directly worsen the project economics, even considering that Rhyolite Ridge is a lithium-boron deposit. Recyclers and manufacturers argue over the details of 30D: Redwood Materials is betting on tightening the rules and closing the leasing loophole, while automakers often favor preserving the ability to use international supplies while accessing the credit, which conflicts with the interests of domestic materials suppliers.

An additional constraint is the reluctance of some companies to engage in public lobbying out of fear of drawing the administration’s attention. At stake, meanwhile, is quite measurable money: the Tesla and Panasonic Gigafactory, by estimates, receives about $1.8 billion a year through IRA subsidies, and Panasonic warns that without a protected ramp-up period for capacity and the supply chain, the market will swallow us.