It’s the 11th hour for EV taxes… and everyone’s bickering about President Biden’s rules. In August, his Inflation Reduction Act introduced rules that require EVs to be mostly US-made to get $7.5K in green tax credits (all EVs were formerly eligible). But US trade partners like the EU, UK, South Korea, and Japan say “Made in America” rules discriminate against foreign companies — and they’re urging Biden to ease or delay them.
- Strict rules: Based on the current IRA rules, cars need to be built in North America and get 40% of key battery minerals from the US (or allies) to earn the credit starting next month.
- Failing grades: As of now, not a single car model qualifies for the full credit — though Ford and GM say their cars will qualify for half.
“Made in America” mayhem… is escalating. Initially, Biden’s EV enthusiasm boosted investment in electric manufacturing: Kia, Ford, Honda, Tesla, Toyota, and GM all announced additional US EV investments after the IRA’s passage. But now critics say strict rules could discourage future investment — or even start a trade war.
- Cranky carmakers: South Korea-based Hyundai, the #2 US EV seller after Tesla, said the rules are an “astronomical” blow and demanded an exemption.
- Peeved presidents: French President Macron is in the US this week to urge Biden to relax the rules to avoid an EU trade war.
Biden faces a tough balancing act… The president wants to boost domestic EV manufacturing and reduce America’s reliance on China, which manufactures most of the world’s EVs (and EV batteries). But Biden also doesn’t want to alienate global carmakers, which recently announced plans to invest $82B in US EV manufacturing — and create 115K US jobs.