The newly passed Inflation Reduction Act introduced new federal tax credits for electric vehicles in the United States. Essentially, the bill mandated certain rules that may disadvantage European automakers like Volkswagen.
Now, EU Commissioner for the Internal Market Thierry Breton announced on January 8 that the Commission had begun negotiations with the US about the EV subsidies in the North American trade bloc.
Breton also stated that the European Commission is raising its concerns and thoughts on “other aspects” of the IRA.
Previous measures
In retrospect, the US and the EU also launched the US-EU Task Force in late October to discuss the new laws that may discriminate against foreign companies.
The Task Force is formed to negotiate relevant concerns of the EU about the IRA.
“Both sides agreed on the importance of close coordination to support sustainable and resilient supply chains across the Atlantic, including to build the clean energy economy.”
European Commission
For instance, the IRA offers customers up to $7,500 tax credit if their EV is equipped with a North American-made battery. The battery must also incorporate minerals mined/recycled on the continent.
That said, the EU is concerned that the new law will cause a barrier in the supply chain, disadvantaging foreign manufacturers.
EU’s apprehension about the IRA is understandable. The bill is indeed formulated to boost the US economy and reduce foreign reliance. However, it may be hard for foreign manufacturers in the EV industry as it will put them in a disadvantageous position against US rivals.
