An agreement between authorities in the European Union and those in the U.S. could see European-made EVs receive the same federal tax credits as those locally produced in North America.
President Biden’s Inflation Reduction Act has ruffled feathers across the automotive industry. It stipulates that EVs need to be built in North America to receive a $7,500 tax credit and that they must have batteries comprised of at least 40 per cent of materials sourced in North America or from a U.S. trading partner.
European Commission vice president Valdis Dombrovskis recently held talks with U.S. Trade Representative Katherine Tai, Commerce Secretary Gina Raimondo, and Treasury Secretary Janet Yellen on the issue, Reuters reports. The European Union believes the act is discriminatory against its producers.
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“Last month Tesla model Y was the most sold car in Germany,” Dombrovskis said. “That would not have been possible without the un-discriminatory EU subsidy, while EU electric cars do not get a similar subsidy in the U.S., which is discrimination that we want to address.”
Dombrovskis appears optimistic that an agreement between the EU and U.S. can be reached.
“There is a willingness to engage on the U.S. side on this,” he added. “We hope we can resolve these issues before they become disputes.”
It remains unclear what kind of concessions could be made to car manufacturers across the European Union but U.S. Trade Representative Katherine Tai believes an agreement will be reached.
“On the strength of the EU-U.S. relationship, I have every confidence we will work through this,” she said.
The European Union isn’t alone in expressing concern about the Inflation Reduction Act. South Korean officials are similarly frustrated with the policy and have also had discussions with U.S. officials to ensure that its EVs are also eligible for tax credits.