What’s Next for Advanced Energy Manufacturing in the United States?

The One Big Beautiful Bill Act (OBBBA) introduces a mix of incentives and challenges for US advanced energy manufacturing. While it preserves the 45X production credit and introduces 'full expensing' for capital investments, it also imposes stricter foreign entity of concern (FEOC) restrictions and accelerates the phase-out of certain clean energy tax credits, leading to reduced demand projections for solar, wind, and electric vehicles. The report suggests that manufacturers should pivot toward grid equipment, geothermal, nuclear, and upstream components where demand still exceeds domestic capacity.

• The One Big Beautiful Bill Act (OBBBA) provides a financial boost through 'full expensing,' allowing manufacturers to immediately deduct the total cost of research, equipment, and plant investments in the year they occur. However, RMI's analysis of a hypothetical battery plant indicates this adds only a 'low single-digit percentage points' to the internal rate of return (IRR), making it significantly less impactful than the 45X credit, which can increase IRR by more than 20 percent.
• The early termination of tech-neutral tax credits (45Y/48E) and the 30D credit under OBBBA is projected to significantly lower US demand for certain technologies by 2035. Solar and wind capacity additions are estimated to be 200 to 500 GW lower than pre-OBBBA levels (a 25% to 60% reduction), while light-duty EV adoption may decrease by 27 million to 41 million vehicles (a 20% to 34% reduction).
• To maintain eligibility for the 45X credit, manufacturers must now adhere to stricter foreign entity of concern (FEOC) restrictions, necessitating a shift away from Chinese supply chains. While this transition may increase costs and face inflationary pressures from tariffs, the high value of the 45X credit makes these investments worthwhile.
• Despite headwinds in wind and EV assembly, significant opportunities for domestic investment remain in sectors where demand exceeds current US capacity, specifically grid equipment, geothermal, nuclear, and upstream solar and battery components. For instance, US power transformers currently face a 30 percent supply deficit, with 80 percent of supply coming from imports.

APA

RMI (2025). What’s Next for Advanced Energy Manufacturing in the United States? https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/

Chicago

RMI. What’s Next for Advanced Energy Manufacturing in the United States? 2025. https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/.

Wikipedia

{{cite report |author=RMI |title=What’s Next for Advanced Energy Manufacturing in the United States? |date=18 September 2025 |url=https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/ |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmi2025whats, author = {{RMI}}, title = {{What’s Next for Advanced Energy Manufacturing in the United States?}}, institution = {RMI}, year = {2025}, month = sep, url = {https://rmi.org/resources/whats-next-for-advanced-energy-manufacturing-in-the-united-states/}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }