It was tempting when Democrats announced their wonderful climate deal to believe that U. S. auto executives would not be able to do so. U. S. uncorked bottles of champagne. But any sparkling wine will most likely be frozen until Washington finalizes the fine print on the bill that would lift the cap on electric vehicle tax credits. .
Just 3 months ago, Senator Joe Manchin said it would be “ridiculous” to increase the $7,500 incentive with runaway inflation and suffering automakers to keep up with demand. Raise the limit of 200,000 vehicles whose merit is beginning to decrease. Tesla Inc. , General Motors Co. , and Toyota Motor Corp. have crossed this threshold; Nissan Motor Co. and Ford Motor Co. se closer.
While Wednesday’s news was a sweet relief, it’s still unclear how stingy this bill will be when it comes to eligibility. For electric cars to be eligible, their batteries will need to involve minerals mined or processed in a country with which the U. S. has a flexible industrial agreement, and some of the parts will need to be manufactured or assembled in North America.
This would start next year and content requirements would become stricter after 2024. This will be tricky, because while automakers and battery makers are spending billions on new plants in North America, many of those amenities are still being planned and built. An enemy of U. S. industry, it accounts for nearly three-quarters of the production capacity of lithium-ion batteries and more than a portion of the world’s lithium refining capacity.
Manchin would possibly have come, but he’s setting the bar high for automakers, forcing them to use a domestically sourced chain that has yet to fully materialize.
“That link is a little closer,” said Jeff Yambrick, a former executive at Chinese battery maker Svolt, who now runs a startup that installs mobile factories and chains for U. S. -based corporations.
The law released this week can replace it before it passes Congress. But it is transparent that Beijing is on Washington’s mind. Manchin himself told Bloomberg’s Steve Dennis that the EV credits are designed to prevent China from dominating battery parts and critical minerals.
While this point of scrutiny of China is not a surprise, it may just be a headache for Contemporary Amperex Technology customers Co. Ltd. et. The Chinese corporate giant has explored factory sites in North America and just struck a deal to get lithium iron phosphate batteries to force cars with Ford’s Mustang Mach-E gaming apps and F-150 Lightning pickup trucks.
Manchin and his fellow Chinese hawks want to be careful to go overboard and set up content passes that push the auto industry deeper into the arms of Chinese suppliers, said Abigail Wulf, director of critical minerals strategy at Seuring America’s Future Energy, a Washington-based nonprofit. advocating independence from American power.
“If this is followed correctly, with the right dose of delicacy, we will be even more indebted to China,” Wulf said in an interview. “We need to make sure this is feasible for automakers. “
Bloomberg contacted seven automakers about the bill, most of which said they were still doing so. In its current form, it would lift the cap on EV sales later this year and extinguish the availability of credits for a decade.
“If you look at the landscape as it exists today, it’s a challenge, but it’s doable,” said Joe Britton, director of the Zero-Emission Transportation Association, which advocates for EV adoption. “We can succeed in those parameters. “