Slight changes to the big budget bill left the factory’s tax credits intact, according to the carmaker, which will use the batteries to make more affordable electric vehicles.
China’s national champion carmaker BYD embodies a state-led industrial model that America may no longer be able to compete with.
The company has devoted resources to autonomous driving rather than developing new models to attract car buyers.
But the benefits of the deduction, estimated to cost $31 billion over four years, may be limited to a narrow slice of consumers, economists say.
China’s lead in electric vehicle technology, which is already huge, could become insurmountable if incentive programs are slashed, auto experts and environmentalists say.
Ford Motor said it would open a new plant in Michigan that could become ineligible for federal incentives under a policy bill championed by President Trump and passed by the House.
Automakers and car buyers are taking a second, harder look at hybrids after leaving them behind for electric vehicles.
Mr. Musk says the driverless taxis could begin ferrying passengers on Sunday in Austin, Texas, where other companies already have similar cars on the road.
BYD and other companies doubled their share of the car market after the European Union imposed higher tariffs on electric vehicles from China.
Battery companies are slowing construction or reconsidering big investments in the United States because of tariffs on China and the proposed rollback of tax credits.