Andrew Duerhren reports that new requirements still likely mean fewer options for car buyers hoping to claim $7,500 tax credit for EV purchases. He writes in The Wall Street Journal:
The Biden administration is moving to jolt the domestic electric-car industry out of its reliance on China. But much-awaited rules released Friday appear to leave some room for U.S. companies to work with Chinese partners.
The new requirements will likely reduce the number of electric-vehicle models that consumers can buy and qualify for a $7,500 tax credit. How many vehicles are eligible will hinge on automakers’ ability to build cars that comply with the rules.
At issue is a new requirement that Americans can’t claim the subsidy for buying any electric vehicle that contains battery materials produced by a “foreign entity of concern.” The administration said Friday the definition would cover any firm based in China, including subsidiaries of U.S. companies, as well as companies elsewhere that are 25% or more controlled by Chinese state entities. Other arrangements that involve Chinese companies, such as licensing technology, might be permissible under the rules, officials said.
The decision could come as a relief to some automakers that already have relationships with industry-leading Chinese battery companies or were considering such ties. But it will likely frustrate lawmakers who wanted to see the U.S. auto industry severed from Chinese suppliers, which are the dominant source of the minerals and components that power electric vehicles. […]
The “foreign entity of concern” definition will also apply to a $6 billion battery-grant program run by the Energy Department. Entities that meet the definition won’t be eligible for the grants. Applicants who don’t source materials from foreign entities of concern will have an advantage in the application process.
Read more here.
