The United States limits the access of Chinese companies to tax exemptions for electric vehicles. Exempted materials account for less than 2% of the value of metals important for batteries. The administration of US President Joe Biden has also issued directives that will limit the Chinese component in batteries eligible for tax exemptions on electric cars starting next year 2024, which could be considered a new trade war between Washington and Beijing in the electric car sector, CNBC reported.
CNBC said that in a victory for automakers, the US Treasury will temporarily exempt some important metals from strict new rules banning materials coming from China and other countries that the US government considers foreign entities of concern.
The new rules were passed by the law of August 2022 to keep the US electric car battery series away from China. The feoc rules come into force in 2024 for batteries and 2025 for the vital metals used in their production.
In what was seen as support for the industry, the American Automotive Innovation Alliance, a group representing almost all major automakers, said the decision to exempt rare materials for two years was ”a big deal” without which almost all vehicles would have been ineligible for Operation. The Treasury Department said the few exempted materials account for less than 2 percent of the value of metals important for batteries.
The rules are expected to reduce the number of electric vehicles eligible for EV tax credits. The law made any vehicle ineligible if it was not assembled in North America. Earlier this year, new requirements for battery and metal sources came into force with the maximum price eligibility and buyer income from January 1.
Senate Energy Committee Chairman Joe Manchin criticized the Treasury Department for allowing some important minerals from China to come and vowed to take every opportunity to ”reverse this illegal and shameful proposed rule and protect America’s energy security”. The Treasury Department said it will allow compliant vehicles to operate until the rules are finalized and will have a fast compliance method for automakers and supply chains.
