RENO — For Tom Burns, the ability to mine, process, produce and recycle lithium-ion batteries is an economic opportunity for Nevada that only has one analogy in the state’s history — the 1864 discovery of the Comstock Lode. 

“Most of that money went over the hill and built San Francisco,” Burns, executive director of the Governor’s Office of Economic Development, said at a March event in Reno hosted by the Zero Emission Transportation Association (ZETA) Education Fund, an electric vehicle advocacy group. “We were a territory and then a fledgling state at the time, so I'll give us a pass for the first time. But it shouldn't happen the second time.”

Protecting Northern Nevada’s burgeoning lithium loop is seen as a way to accomplish the long-held goal of economic diversification in a state dependent on gaming and the financial whims of visitors.

It’s not hard to see why. 

Nevada, which has the only operating lithium mine in the U.S., is well-positioned to be a key player in the clean energy transition.

Two companies — Ioneer and Lithium Americas — recently received loans from the Department of Energy to mine and process lithium carbonate in Nevada. Ioneer is expected to begin construction on its Rhyolite Ridge project near Tonopah this year, while Lithium Americas has begun construction in Humboldt County for its Thacker Pass project. 

Tesla and Panasonic have been players in Northern Nevada for more than a decade, manufacturing battery cells and electric vehicles at the Gigafactory 9 miles east of Reno. And Carson City-based Redwood Materials, the only American company using recycled lithium batteries to create new ones, takes scrap from manufacturers, uses chemistry to break it down into elements and recombines them into a usable cathode.

Under President Joe Biden, the federal government made enormous investments into Nevada’s lithium loop through programs and tax credits created by the Inflation Reduction Act (IRA), the August 2022 bill passed with only Democratic support.

The stakes — for the Northern Nevada economy and companies powering its growth — are high. The state has received the most federal investments per capita from the law, according to the Rhodium Group and MIT’s Clean Investment Monitor, and saw the second-highest figure for actual clean investment as a percent of gross domestic product between September 2023 and 2024, at more than 3 percent. 

But with Republicans now in power across Washington, their future is imperiled. 

IRA-created tax credits are jeopardized by Republicans’ massive push to cut spending, amidst a broader right-wing cultural backlash to electric vehicles — even as Tesla founder Elon Musk has amassed enormous power in the White House.

With Republicans’ budget blueprint instructing committee chairs to find $1.5 trillion worth of spending cuts, phasing down or eliminating IRA tax credits has become a popular policy idea — especially because uptake on the credits has been more robust than initially predicted. Most projections for the budgetary effect of the IRA tax credits have doubled since 2022, with estimates for their deficit hit ranging from $700 billion to $1 trillion. Republicans argue that the tax credits amount to a corporate tax cut to subsidize an end product — electric vehicles — that are not viable in the market and used by coastal elites.

Energy and auto lobbyists have mounted a furious lobbying campaign to argue for preservation of the credits, or at least against their wholesale elimination. Advocates argue that the credits have enormous return on investment — making the U.S. more competitive with China through facilitating the building of domestic supply chains in critical industries.

Companies remain optimistic about the Trump administration’s desire to unleash critical minerals, including using wartime authority to fast-track domestic minerals production. And in an era in which both political parties are eager to compete with China, where 65 percent of all EV battery components are made, politicians argue the credits are needed on national security, competitiveness and job growth grounds. 

But companies say that sustained investment is needed to create a supply chain — and all of the jobs that come with it — that’s fully American.

“We can make the batteries, but right now I'm buying the supply,” Panasonic CEO Allan Swan, the president of Panasonic Energy of North America, said in an interview. “Most of the supplies come from Korea and Japan … and I don't want to do that. We want to buy it here. But these materials are tough.”

Stuck in the middle are Republicans such as Rep. Mark Amodei (R-NV), who voted against the bill but whose district has reaped the benefits of the investments. Amodei is not alone — he and 20 colleagues sent a letter to House Ways and Means Chair Jason Smith (R-MO) last month arguing against a straight repeal.

For Amodei — who appeared onstage at the ZETA event with Swan and Redwood Materials founder JB Straubel — the energy provisions of the IRA are worth fighting for. 

Nevada’s 2nd Congressional District — which Amodei represents — ranks fifth among all congressional districts in amount privately invested in projects between the IRA’s passage and the end of 2024, with $6.6 billion in actual investment thus far and an announced nearly $11.2 billion outstanding.

In an interview, Amodei said keeping the advanced manufacturing production and new clean vehicle credits in place helps achieve his goal to subsidize the development of the supply chain rather than electric vehicles themselves. Asked if keeping the credits in place was a “red line” for him, the congressman confirmed it was (barring a better policy forming) and called them “the floor” — a significant stance in the House where Republicans’ margin for error on votes is three members.

“The electric vehicle and battery technology stuff is not the future … it's now,” Amodei said at the ZETA event. “The question is, how big a share do you want in the future, when you are sitting here at the cutting edge of what's going on in this area and in this state?

“Pursuing those because it's the right policy for your region and your people, regardless of whether you're a donkey or an elephant or a wild horse or whatever you are, is a smart thing to do.”

How the tax credits work

Two key tax credits — the 45X advanced manufacturing production credit and the 30D new clean vehicle tax credit — have been a boon to the lithium loop.

The 45X and 30D tax credits apply to different segments of the supply chain — but electric vehicle advocates argue that they build on another, and cutting one will be a detriment to companies that claim the other.

45X is a production tax credit meant to incentivize battery production, and works differently depending on the industry. For critical minerals, companies can claim 10 percent of the cost of production — something that Lithium Americas, Ioneer and Redwood Materials are planning to do. 

For companies such as Panasonic that produce battery cells, the credit is worth $35 per kilowatt-hour — a standard measurement of power used over an hour — produced. According to the company, the Panasonic facility at the Tahoe-Reno Industrial Complex produces 40 gigawatt-hours worth of advanced lithium-ion batteries per year, which would qualify it for an estimated $1.4 billion in annual tax savings, before factoring in its planned expansion in Kansas.  

Unlike other tax credits, the critical minerals production credit does not sunset — meaning that unless Congress votes to phase it out, Nevada companies can claim it for the entire lifetime of a project. 

If 45X targets the supply side, then the 30D new clean vehicle tax credit is structured to boost electric vehicle demand and domestic manufacturing.

The 30D tax credit — which has come under much greater scrutiny from Republicans — offers individuals or businesses a tax credit of up to $7,500 for purchasing an electric vehicle. The credit has a foreign entity of concern (FEOC) rule — meaning it does not apply for purchasing cars whose battery components were made by companies where an American security threat, including the Chinese government, is at least 25 percent of the equity interest (minus a limited exception for graphite, which expires in 2027).

While the mining companies in Nevada can’t technically claim the 30D credit, it’s still relevant to their business models. Lithium Americas already has a contract with General Motors for the lithium that its mine will produce; Ioneer has a similar agreement with Ford. 

While the prospect of claiming 30D is not the only reason for auto giants to partner with Nevada lithium miners — managing complex supply chains in Asia can get cumbersome — it’s a significant driver of those investments, experts say. For Redwood Materials, which is manufacturing cathodes in Nevada, the 30D tax credit provides a competitive advantage as well. 

“There is nothing requiring American procurement or restricting sourcing from foreign entities of concern in 45X,” said David Kovatch, who worked on IRA policy and implementation at the White House and Department of Energy and now runs the Washington office of Mission Strategies, a clean energy lobbying firm. “If I'm a U.S. mining or critical minerals processing project, 30D and stronger foreign entity of concern provisions are essential to competing with dumped Chinese imports.”

Where Amodei sits

In an up-or-down vote, the IRA tax credits likely survive in Congress. But any repeal or phasedown will be included as part of a broader bill that extends the 2017 Trump tax cuts, cuts government spending and contains a host of other Trump priorities — putting immense pressure on individual Republicans.

Lobbyists said tax writers and Trump allies will likely try to pick off members one by one — especially given that members typically only get one chance at declaring a red line and holding up a bill. Some, such as those from New York and New Jersey, are also advocating to allow taxpayers to fully deduct state and local taxes. Others, such as those representing swing districts, may have deeper concerns about items, including cuts to Medicaid, that more directly affect voters.

Many industry advocates expect 45X to be relatively safe, but are concerned about the possibility of 30D being significantly altered or ended — and thus are trying to sway Republicans with large renewable energy investments in their districts. But their task is made more difficult by the intense culture war politics around electric vehicles — derided by Trump, save for his recent embrace of Tesla — given that it directly subsidizes their purchase.

ZETA Executive Director Albert Gore III has been making the case that to compete with China, which isn’t a market-based economy, deployment credits with demand signals are a critical tool.

To “wean” the U.S. off of Chinese products, he said, “what better way to ensure that the domestic industry can scale up to be competitive under any circumstances in the future than to pair the production credit with the deployment credit?”

Amodei, for his part, said that the preservation of those two tax credits is “the floor” for him and that he plans to make the case to Republican tax writers that the incentives will ultimately lead to more tax revenue through economic growth. 

But the longtime congressman — who represents a safe Republican district — is largely regarded as a team player who typically votes with leadership.

Thus, the likeliest way for him to avoid eliminating the credits is during behind-the-scenes negotiations, rather than rebelling on House floor votes.

“If I can’t get this done, as the only Republican member in the delegation, in the majority, with a Republican White House, [then] what the hell?” Amodei said. “This is one of those areas where I’m not asking you to bleed for us. This is a great policy, and maybe it’s one of the things you should tout.”

How companies are feeling

Many companies in Nevada plan to claim these tax credits but have not yet begun production. But experts say the existence of the credits has brought more certainty — the corporate world’s currency of the realm — across the domestic electric vehicle supply chain and given clean energy companies a financial rationale to locate in the U.S.

“We have a huge amount of momentum in this direction that we can either maintain and build on in ways that benefit Reno and lots of other communities around the country — and the country as a whole — or we can take a step back,” Gore said in an interview. “But that's not going to stop the flow of capital and human resources and innovation around the world. It's going to go elsewhere.”

Nevada’s companies are projecting confidence despite the potential for the tax credits to disappear or be phased down. Numerous companies said their businesses are built to withstand policy fluctuations — but that the disappearance of the tax credits would be disappointing. Canceling those credits could imperil domestic expansion plans — which means new jobs — for battery makers.

Adding to the uncertain climate, many in the industry don’t want to get involved in the lobbying effort at all, afraid to draw the attention — and ire — of the Trump administration.

While companies broadly want to see the tax credits preserved, their specific priorities differ depending on their place along the supply chain. Mining companies want to ensure 45X — and its indefinite time horizon — are preserved. Those based domestically may also want a FEOC on 45X so that processing companies can’t source their lithium from outside the U.S.

The companies that do processing and manufacturing, meanwhile, want eligibility rules around 30D tightened. They may also want 45X preserved but without the FEOC, so that they have the flexibility to import lithium.

And original equipment manufacturers and electric vehicle makers have an array of asks, depending on the company. The 30D credit has empowered carmakers to lower prices on electric vehicles, leading some to ask for a three-year phasedown rather than an elimination. But they want to see maintenance of rules that allow them to source battery components internationally and still claim the credit — referred to as the “leasing loophole” — putting them opposite Nevada’s battery material producers.

At Redwood Materials, Vice President of Government Relations and Communications Alexis Georgeson said in an interview that while the company plans to claim 45X eventually, it’s not “hugely significant.” Redwood’s main priority is tightening the rules around 30D to close the leasing loophole — which would mean electric vehicle makers need to source materials domestically to claim the credit and give domestic producers such as Redwood a larger market share.

Tightening the eligibility rules would be one way for Republicans to lower the cost of the credit without fully eliminating it.

“30D is such a hot topic right now,” Georgeson said. “It is — of the IRA credits — maybe the one that is higher on the list in terms of being at risk. And I think the original intent for that credit was really to make it incredibly hard to get, unless we were to do the hard work as a country of pulling the entire supply chain here.”

Chad Yeftich, Ioneer’s vice president of corporate development and external affairs, said that Rhyolite Ridge’s status as a lithium-boron mine insulates it from solely relying on the lithium. Early indicators from the Trump administration’s support of domestic mining and processing have been positive, he said — but Ioneer’s goal is to preserve 45X.

“If that were to go away, that has a very direct impact on the overall project economics,” Yeftich said.

Meanwhile, Lithium Americas, which received a $2.3 billion federal loan that closed during the Biden administration, is not lobbying on the bill, according to a mining executive familiar with the company.

Disparate priorities are impeding the industry’s ability to advocate on the bill, numerous executives and industry experts said. In Michigan, more than 40 companies, including Ford and General Motors, sent a letter to the state’s congressional delegation laying out the case for preserving a suite of enumerated IRA tax credits. But players in the Nevada lithium industry said no such coordination exists in the Silver State.

Industry advocates argue that whether companies are projecting confidence or not, the removal of the tax credits would delegitimize domestic manufacturing. Without the incentive structure, battery cell manufacturers would likely take their business to a cheaper country — though Trump’s newly announced tariffs will scramble the entire supply chain.

Ending the tax credits could have a major economic impact in Northern Nevada. Between Panasonic and Tesla, the Gigafactory receives $1.8 billion annually in IRA subsidies, and smaller players who rely on the credits have popped up in the Reno area as well. Those funds would disappear with the tax credits.

“It's a shock to the system,” said Rohan Patel, a former Tesla executive. “Any state that has more of these types of investments is going to be more significantly and negatively impacted. That's the unfortunate bottom line for Nevada.”

China, according to Panasonic executive Swan, is 10 years ahead of the U.S. in lithium processing. The IRA and other incentives allow Panasonic to build new factories, conduct workforce development and build out the supply chains that will make the American industry competitive, he said. 

“We need a period of time where we continue to do that,” Swan said. “Because if you don't, then the market will devour us.”