Electric cars, will Biden be able to impress the Chinese?
Biden continues with his plans in an attempt to throw Chinese electric cars off the road but must deal with reality. Meanwhile, manufacturers and dealers are asking to review the EPA parameters because the demand for EV powertrains is still too low
Although the White House has spent the last few months promising chancelleries around the world that it would review the protectionist parameters of Biden's so-called IRA ( Inflation Reduction Act ), the maxi 369 billion dollar plan to boost American industry, the president American doesn't seem to have any intention of pressing the brake pedal.
THE USA WANTS TO THROW CHINESE ELECTRIC CARS OFF THE ROAD
Joe Biden's intent – it is certainly no mystery – is to encourage his own industry by banning, starting from 2024, electric cars equipped with Chinese batteries. An unofficial but "de facto" ban, since the American administration's intention is to exclude foreign brands with lines outside the USA from federal incentives (federal tax credits of up to 7,500 dollars). Incentives which at the moment represent the only way to push users towards new engines, otherwise still too expensive for the pockets of the middle class.
With such a move, the White House also hopes to be able to mitigate the price of domestically produced electric cars, making them competitive compared to the much lower and more inviting price lists of the Chinese brands that are arriving in the 50-state territory.
A strategy that is now more necessary than ever for US industry, especially after Joe Biden sided in favor of the strike carried out from September to Thanksgiving by the UAW, the main blue-collar union, protecting internal employment levels: now in exchange the automotive bigs ask for preferential treatment.
BIDEN CONFLICTS WITH HARSH REALITY
It's just a shame that Biden's protectionist plans are colliding with harsh reality. Applied to the letter, in fact, the White House provisions would exclude all cars made in the USA, requiring that the critical minerals of the accumulators do not have foreign (read: Chinese) origin.
This is why the Treasury Department intervened by softening the legislation that excludes any models from federal tax credits of up to a total of 7,500 dollars for those who purchase an electric car. In fact, there will be tolerance quantities and probably other exemptions.
WHO ARE THE EXCLUDED
But the constraints will remain very tough, banning between 2024 and the following year any battery component produced by companies owned by a "foreign entity of concern" (Feoc, or "foreign entity of interest"), or batteries with over 2% of critical minerals extracted, processed or recycled by Feoc. Also excluded are companies controlled by Feoc, or in any case in the shareholding structure (25% of the board or voting rights is enough).
FORD'S MOVE TO DISGUISE THE FEOC
This is why US brands that have existing alliances with the Chinese for electric cars are taking action by pushing their partners to establish their own supply chain on US soil. The most striking case probably concerns Ford, which intends to build a new plant in Michigan together with the Asian battery manufacturer Catl. If so, given that the partnership would bring value and jobs to the United States, it should fall under the exemptions.
DEALERS AND MANUFACTURERS CATCH LIGHTNING ON THE WHITE HOUSE
In short, for electric car manufacturers who intend to do business in the USA, they will have to dig into their wallets and build their own supply chain across the 50 states. But in the meantime the car giants and now even the dealers continue to not digest the environmental constraints of the EPA, the environmental protection agency, which is pushing to lead to a sales mix made up of almost 70% electric vehicles by 2032 also thanks to a constant tightening of the requirements for polluting emissions.
For this reason, around 4 thousand retailers have taken pen and paper to ask Biden to slow down, considering the race towards electric mobility too uneconomical. All this without giving up attacks on choices deemed too ideological and not very relevant to the real situation: "no government agency, no think-tank and no polling company knows more about car customers than us", we read in the letter.
THE LETTER TO BIDEN FOR CHRISTMAS
“Last year there were many hopes and expectations about electric vehicles, but that enthusiasm has stopped,” write the dealers, echoing what car manufacturers have already complained about. “Today, the availability of unsold BEVs is increasing, also with deep cuts in list prices and generous incentives from manufacturers and the government. As admirable as they are, the goals of the regulations require that consumer acceptance becomes a reality. With each passing day, it becomes more and more evident that this attempt to mandate electric vehicles is unrealistic based on current and projected demand. Electric vehicles are already piling up in our parking lots and this is the best indicator of the market.”
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/smartcity/auto-elettriche-biden-riuscira-a-fulminare-i-cinesi/ on Mon, 04 Dec 2023 13:56:57 +0000.