Foreign automakers are crazy about the new EV tax credit

The auto industry is still processing the new and confusing electric vehicle credits signed into law by President Joe Biden as part of the Inflation Reduction Act of 2022. Foreign automakers, in particular, are scrambling to find some loopholes through the new rules, which it would seem. disqualifies the vast majority of its EV fleet, while others are accelerating plans to build new factories in the US.

EVs manufactured outside North America do not qualify for the $7,500 tax credit. The law also includes provisions aimed at preventing the use of battery components or critical minerals sourced from China, which currently controls about three-quarters of the global battery market.

Two South Korean automakers – Hyundai and its partner, Kia – are threatening legal action over massive climate and energy bills. Both companies have the second largest share of the EV market in the US, but they do not currently produce any EVs in the US, Canada or Mexico.

according to financial TimesChung Yue-sun, a billionaire descendant of Hyundai’s founding family and chairman of the Hyundai Group, headed to Washington, D.C. this week on an “urgent business mission” to urge lawmakers to reconsider the law’s strict manufacturing and supply chain requirements. Flew. And South Korean Secretary of State Park Jin leaned on US Secretary of State Antony Blinken in a call this week to make some allowances for foreign-made EVs, according to Korea Times,

Hyundai plans to build a massive, $5.5 billion car manufacturing plant near Savannah, Georgia, but likely won’t reach volume production until 2025 — meaning the automaker won’t be eligible for the tax credit until then.

Meanwhile, the EU is claiming that the law may violate World Trade Organization rules, barring discrimination between trading partners. “We think it is discriminatory, that it is discriminating against foreign producers with respect to American producers,” European Commission spokeswoman Miriam GarcĂ­a Ferrer told CNBC. “Of course this would mean that it would be inconsistent with the WTO.”

Even domestic automakers are struggling to ensure that their own EVs do not lose their tax credit eligibility by using batteries with materials sourced from China. “We are working overtime to localize our supply chains and ramp up production,” said Chris Smith, Ford’s chief government affairs officer. auto news,

Other companies are accelerating their plans to build electric vehicles in the US. Earlier this week, Mercedes-Benz announced that it has begun production of the 2023 EQS SUV at its factory in Tuscaloosa, Alabama, using batteries supplied by a battery factory in Bibb County. And Volkswagen began production of the ID.4 electric crossover in 2023 at its factory in Chattanooga, Tennessee.

So far, the auto industry has invested more than $38 billion to bring battery production to the US by 2026, according to AlixPartners. Major projects include Panasonic’s $4 billion battery plant in Kansas, one of the largest lithium-ion battery factories in the world, and Hyundai’s battery manufacturing facility in Georgia.

Of course, that was the intent of Senator Joe Manchin. The West Virginia Democrat, who was a key negotiator on the Inflation Reduction Act, has generally addressed foreign automakers’ concerns about the law’s limitations.

“Narrate [automakers] To be aggressive and make sure we’re doing extraction in North America, we’re processing in North America, and we put a line on China,” Manchin told reporters earlier this month, Reuters, “I don’t believe we should be building a transportation mode on the back of foreign supply chains. I’m not going to do that.”

But other Democrats have suggested there may be some wiggle room. Michigan Senator Debbie Stabeno told Reuters “Talks” are going on about the new rules. She also noted that the law covers billions of dollars in new loans and grants for auto and battery production in the US.

Source link

Leave a Comment