July 18, 2024

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US moves to choke China’s role in electric vehicle supply chain

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The Biden administration has moved to choke off China’s role in the US’s electric vehicle supply chain with rules that critics allege will slow the transition from petrol-fuelled cars.

The US Treasury announced on Friday that from next month no US-manufactured EVs that include Chinese-made battery components will be eligible for the full subsidies offered by President Joe Biden’s $369bn landmark climate law.

Nor will EVs qualify for the Inflation Reduction Act incentives if they are made by companies with significant ties to the Chinese government or produced with a licensing agreement with a China-based or Beijing-controlled operator.

“With this guidance and the clarity that it will provide, we’re ensuring that the US electric vehicle future will be made in America,” said John Podesta, Biden’s top clean energy adviser.

The rules come after Biden met Chinese President Xi Jinping last month in a bid to ease tensions between the world’s two largest economies.

At present, Podesta said: “China still dominates the supply chains for key technologies . . . they completely outpace the US and our allies on the production of batteries and their components.”

As well as dominating EV and battery production, China processes more than half the world’s lithium, cobalt and graphite, which are crucial inputs.

The new rules are expected to reduce how many car models qualify for the full IRA tax credit of $7,500 per vehicle in the near term.

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The Alliance for Automotive Innovation, which represents car and battery makers in the US, has already warned against tightening the conditions for the subsidies.

It said that even before the rules were announced only about a fifth of EVs on sale in the US were eligible…

2023-12-01 11:46:54

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