Status: 08/12/2022 09:08 a.m
The US government wants to encourage the purchase of electric cars. But the program has a huge catch: The production must take place entirely in the USA – a requirement that can hardly be met.
The Americans and their cars, that’s a very special relationship. The bigger and louder the better. But in the USA, too, the government now wants more quiet, environmentally friendly electric cars on the streets instead of roaring gas guzzlers.
According to the Inflation Reduction Act, anyone who buys an electric car should be able to get a tax rebate of up to $7,500. However, this only applies to people who earn less than $150,000 a year. And the cars can’t be more expensive than $55,000 – except for trucks and SUVs, where the limit is $80,000. Those are the rules for consumers.
Specification: 100 percent production in the USA
The car manufacturers too must meet certain requirements in order for their cars to be fully eligible. And they have it all: “As I understand it, no automotive company is currently able to reach the threshold of 100 percent production in the USA,” says trade expert Emily Benson from the CSIS think tank in Washington.
Because there is only full funding if, firstly: the electric car was assembled in the USA and secondly: the battery was also largely produced in the USA. Above all, no minerals from certain countries may be used in it.
become more independent from China
These rules should not be quite as strict at the beginning, but will become stricter in the coming years: “All car companies are now faced with the question: How do they get their production to be moved to the USA so that their entire supply chain is here? And that is the big obstacle.”
So it’s about the supply chains. The US wants to become more independent from countries such as China, which plays an important role in the production of lithium and other minerals. Or from the Democratic Republic of the Congo, leading cobalt producer. Both minerals are important precursors in battery manufacture.
German companies are also affected
So the car manufacturers now have to rethink quickly if they want to benefit from the consumer incentive to buy. This also applies to German manufacturers in the USA. VW, Mercedes-Benz and BMW have large production facilities in the USA and some already have battery factories. The batteries are only assembled there. The heart, the battery cell, has not yet been manufactured in-house, but bought in, mostly in Asia.
“Again, it depends on the existing supply chains. And on the level of costs that foreign companies can incur to transform their supply chains to be more focused on domestic production in the United States,” says expert Benson.
E-cars accepted in the US
So there is still a lot to do for the car manufacturers on the way to sustainable and independent production of electric cars in the USA. In any case, US consumers can get used to the idea of switching to electric power.
According to several surveys, almost half of all Americans can imagine driving electric cars instead of combustion engines – also thanks to previous subsidy programs. It remains to be seen whether the strict rules of the program in the Inflation Reduction Act will put consumers in a bad mood to buy.
EU: US subsidies for electric cars could violate WTO rules
The EU sees the US subsidy guidelines as a violation of the rules of the World Trade Organization (WTO). “We believe that these are discriminatory should foreign manufacturers be disadvantaged compared to US producers,” said a spokeswoman for the European Commission.
The EU agrees with Washington that tax credits are an important incentive to boost demand for electric vehicles. But: “We therefore call on the United States to remove these discriminatory elements from the bill and to ensure that it is fully WTO-compliant.”
Promotion of electric cars in the USA: There is a catch
Lena Stadler, ARD Washington, August 12, 2022 08:29 a.m