One might think the U.S. Inflation Reduction Act would be constructed in such a manner as to help Americans by reducing inflation. However, not only does the Inflation Reduction Act not help reduce inflation, but the climate change bill carrying the name The Inflation Reduction Act is now the cause for complaints by Europe and Asia because the falsely named spending bill doesn’t help their economy.
The issue stems from the part of the climate change bill that provides a $7,5000 federal tax credit for electric vehicles. As the bill was written the vehicles needed to be assembled in the USA with battery components mostly sourced from the U.S.A. Europe and Asian automakers are not happy because they want their vehicles, made in Europe and Asia to benefit from the tax credit.
Of course, the first thing Joe Biden does is tell Europe and Asia he will modify the rules to permit vehicles made outside the USA to benefit. The exact opposite of the intended construct of the bill in the first place.
But,… that’s multinational corporate globalism in action.
WASHINGTON—The Biden administration on Monday delayed proposing detailed rules for new tax incentives for electric vehicles, following strong pushback from European and Asian allies that the subsidy program discriminated against their companies.
The Treasury Department said details on the battery-sourcing requirements that electric vehicles must meet to qualify for up to $7,500 in tax credit will be released in March, instead of by the end of this year as earlier planned.
The department said, however, it will release “information on the anticipated direction” of the battery requirements before year-end to help manufacturers prepare to identify vehicles eligible for the tax credit. It didn’t specify what information would be made available then.
The EV tax incentives, part of the Inflation Reduction Act that President Biden signed into law in August, are designed to accelerate a transition to cleaner vehicles. But it also includes complex requirements aimed at boosting domestic production of electric vehicles and batteries, setting off complaints from European and Asian governments as well as auto makers.
To qualify for the full $7,500 in tax credit, vehicles must go through their final assembly in North America, a requirement that disqualifies many electric vehicles from non-U.S. car makers since they are typically assembled overseas.
The new rules also require EVs to have at least 40% of their critical minerals for batteries sourced in the U.S. or countries that have free-trade agreements with the U.S., starting in 2023. That threshold is set to rise to 80% by 2026.
At least 50% of the components in the batteries must be manufactured or assembled in North America by 2024, with that percentage rising gradually to 100% by 2028.
A Treasury official said the department needed more time as it works through the complexities of crafting the technical rules.
Following a meeting with French President Emmanuel Macron in early December, President Biden said the U.S. could offer what he called tweaks to the program to make it easier for European countries to participate.
The Treasury Department said the details on battery requirements will come as part of a notice of proposed rule making in March and noted that the new requirements will take effect only after the proposed rule is issued. (read more)
