Column: US hits the EV accelerator to cut Chinese metals ties.
The Inflation Reduction Act includes the “largest investment ever in combating the existential crisis of climate change”, according to President Joe Biden.Around $369 billion of federal funds will flow into climate change and energy security, boosting domestic capacity to produce wind turbines, solar panels and electric vehicles.The IRA extends and expands the existing electric vehicle subsidy of up to $7,500 but conditions the tax credit on the sourcing of the mineral content of the battery.
That, though, is the point. The link between subsidy and mineral input is meant to accelerate the drive to build out domestic, or at least friendly, critical minerals capacity and break China’s stranglehold.Auto-makers should “get aggressive and make sure that we’re extracting in North America, we’re processing in North America and we put a line on China,” said Senator Joe Manchin, the architect of the minerals sourcing component of the EV subsidy scheme.
Also not on the list is the European Union, which has already said the new EV subsidy scheme may breach World Trade Organization rules. The challenge for auto-makers to qualify for the subsidies still remains immense, given the multi-year process of building new mines, particularly in the United States.The Department of Energy was given $6 billion to invest in a domestic battery supply chain by the Bipartisan Infrastructure Law passed last year.
The IRA delivered a little more bounty by lifting the tax credit to 30% for investment in any “advanced energy project”, which covers a wide spectrum of green transition technology.
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