The US government announced on the 1st a new set of measures to incentivize the domestic electric vehicle supply chain, further restricting the role of mainland China’s supply chain in the US electric vehicle market; however, opponents believe that this will delay the speed of the US automotive transformation.
The Biden administration announced that starting from January next year, electric vehicles using batteries made in China or manufactured by enterprises closely related to the Chinese government, as well as batteries produced by entities within China or authorized by Beijing-controlled operators, will not be eligible for full subsidies provided by the Inflation Reduction Act (IRA). The new regulations also give automobile manufacturers a two-year transition period to switch to batteries from other sources.
Under these new regulations, there will be a significant reduction in the number of electric vehicles eligible for full subsidies of $7,500 per vehicle. According to the Alliance for Automotive Innovation, currently only about one-fifth of electric vehicles in the United States are eligible for full subsidies; after implementing these new regulations, more electric vehicles will be excluded, which is unfavorable for consumers.
Bodysta, Senior Advisor on Clean Energy at White House stated that China still monopolizes key battery technology supply chains and surpasses both America and its allies in battery and component production. With these new regulations and clear provisions,”we will ensure that future American-made electric vehicles are made in America.”
However analysts say it will take several years for America to develop a complete electric vehicle supply chain; although investments related to US EV supply chains have surged since last year,it is expected that these investment projects won’t start production until after 2025.