U.S. Government Loosens Rules on Electric Vehicle Tax Credits, Critics Accuse Biden Administration of Helping China
The U.S. government has announced new regulations for electric vehicle tax credits, potentially making more EVs eligible for credits of up to $7,500. The Treasury Department’s final regulations under the 2022 Inflation Reduction Act give automakers more time to comply with provisions regarding battery minerals.
The tax credits, ranging from $3,750 to $7,500 for new EVs and $4,000 for used ones, are aimed at boosting demand for electric vehicles to meet the Biden administration’s goal of having half of all new vehicle sales be electric by 2030. Qualifying for the credits depends on income, vehicle price, and requirements related to battery makeup and minerals.
However, critics have accused the Biden administration of helping China through the new regulations. The rules aim to promote a domestic electric vehicle supply chain and limit tax credit eligibility for vehicles containing battery materials from countries considered hostile to the U.S., such as China, Russia, North Korea, and Iran.
The National Mining Association criticized the exemptions in the regulations, calling them a giveaway to China. West Virginia Sen. Joe Manchin also expressed concerns, stating that the new rule effectively endorses “made in China” and violates the Inflation Reduction Act.
Despite the tax credits, sales of electric vehicles have only grown by 3.3% in the first quarter of this year, indicating a slowdown in the market. The auto industry acknowledges the challenges of transitioning to EVs but sees the rule change as beneficial for investment, job creation, and consumer adoption.
The regulations are likely to make more EVs eligible for credits in the coming years, but the industry is still working on tracing the origin of all minerals to comply with the new rules. The shift towards electric vehicles requires a significant transformation of the U.S. industrial base, according to industry experts.
Overall, the new regulations aim to support the growth of the electric vehicle market while addressing concerns about foreign supply chains and promoting domestic production.
