{"id":33615,"date":"2022-10-13T10:04:29","date_gmt":"2022-10-13T14:04:29","guid":{"rendered":"http:\/\/autosector.com\/?p=33615"},"modified":"2022-10-13T10:04:29","modified_gmt":"2022-10-13T14:04:29","slug":"europe-says-the-inflation-reduction-act-isnt-fair-play","status":"publish","type":"post","link":"http:\/\/autosector.com\/?p=33615","title":{"rendered":"Europe says Biden’s IRA isn’t fair play for the global EV future"},"content":{"rendered":"

What\u2019s good for America<\/a> isn\u2019t necessarily good for your friends across the pond \u2013 at least that is the central message to an urgent call to action from the EU this week against what it sees as \u201cdiscriminatory\u201d tax credits and incentives against European and Asian carmakers in the groundbreaking new Inflation Reduction Act.\u00a0<\/p>\n

President Biden\u2019s flagship act provides tax credits on EVs produced in the US, Canada, and Mexico, all in a move to help make EVs more affordable and accessible to lower-income households and reduce carbon emissions. In addition, the IRA requires EV batteries, which are mostly now produced with minerals and battery cells imported from China, be made in North America, with at least half of all EV batteries coming from the region by 2024, and 100% by 2028. While this is meant to move business out of China, countries with their own vibrant EV industries, as in Europe and South Korea, say they too could be dealt a mighty blow<\/a>. \u00a0<\/p>\n

What it all boils down to is a loss of jobs, and much-coveted green jobs to boot. EU officials claim the new legislation is unfair to foreign producers and puts undue pressure on European automakers to move their business stateside to take advantage of the billions of dollars of incentives on offer, hanging their once booming EV industries out to dry. In addition, the EU is claiming that these provisions could violate World Trade Organization rules, although an investigation could take up to two years to reach a judgment.\u00a0<\/p>\n

Meanwhile, the European Commission\u2019s executive vice president Margrethe Vestager is playing the friend card: \u201cAs a matter of principle, you should not put this up against friends,\u201d she told the Financial Times<\/a><\/em> this week. \u201cYou have what we see as an unbalanced subsidy.\u201d<\/p>\n

South Korea, too, hasn\u2019t minced words on this subject, saying the IRA violates trade rules<\/a> and threatens the economic partnership between the two countries, with multiple senior Korean officials traveling to Washington to make their case. South Korean firms have invested heavily in EV battery productions in the US, to provide batteries not only for American companies but also Korean, Japanese, and European carmakers. By 2025, South Korean firms are expected to invest more than $13 billion in the US to boost battery production. Also, Hyundai and Kia<\/a> announced they would funnel $5.5 billion into an EV and EV battery production facility in Georgia, producing some 300,000 EVs a year by 2025 and creating thousands of jobs.\u00a0<\/p>\n

Other major automakers as well are ramping up their EV and EV battery production in the US to take advantage of IRA incentives. Honda and South Korean battery maker LG Energy Solution <\/a>announced a $4.4 billion investment in EV battery making in Ohio, where Honda already has three plants, all set to start production in 2025. Toyota has announced a $2.5 billion investment in a battery manufacturing plant in North Carolina. Audi just announced<\/a> that it, too, is deciding on whether to build a US-based EV plant next year, while Volkswagen and Mercedes-Benz have also announced plans to build or source EV components in North America.<\/p>\n

In the meantime, a source told<\/a> the Financial Times<\/em> that the European Commission was conducting an \u201cexhaustive\u201d survey of European automakers to gauge which might jump ship and relocate to the US \u2013 of course the European energy crisis could further tip the scales. But Vestager was reportedly heard saying<\/a> that neither side wants to get into a subsidy race, and that the US \u201ccould have a better deal if the subsidies would be done in a way that is not discriminatory towards the EU.\u201d<\/p>\n

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