Biden admin proposes EV subsidy guide that leaves door open to Chinese companies

The Biden administration on Friday proposed eligibility rules for electric vehicle (EV) tax credits that appear to leave the door open to Chinese suppliers, at least in the short term.

The guidance, released from the Department of Energy (DOE) and the Treasury Department, is not yet final, but will likely reduce the number of electric vehicle models that can receive the credit by eliminating battery components made by Chinese companies starting in 2024. However , the rules allow electric vehicles built from minerals mined and processed by Chinese companies to be eligible for the credit until 2025.

The rules also cover Iran, North Korea and Russia, in addition to China. The consumer tax credit, worth $7,500 for fully qualified electric vehicles, is a key policy tool for the administration's electric vehicle push because it is designed to reduce substantially higher costs of electric vehicles in relation to vehicles with an internal combustion engine.

The guidance also addresses eligibility limits for Chinese electric vehicle and battery companies doing business in the US or in mineral-rich countries such as Indonesia, where Chinese companies have a dominant position in the mineral supply chain related to electric vehicles. These companies would comply as long as less than 25% of their capital and board seats are controlled by Chinese entities.

china dominate the global supply chain for the extraction and processing of the minerals that are essential for the manufacture of electric vehicles. In addition to the consumer tax credit, the administration has committed billions in subsidies retrofits for American manufacturing plants and the construction of a national network of charging pointsas well as pursued several aggressive regulations to propel the market toward widespread adoption of electric vehicles over the coming years. The administration is aiming for electric vehicles to account for 50% of all new vehicle sales by 2030.

The electric vehicle market is currently in a tenuous position, with manufacturers considerable losses, consumer demand cooling down and executives are starting to do it go back of some short-term production targets.

It is currently unclear how many Chinese companies could be adversely affected by these standards. The rules state that “license agreements or other contractual arrangements may also create control,” indicating that technology licensing agreements could be allowed under the standards.

The licensing aspect of the guide could be a win for automakers; Some companies had halted their efforts to reach licensing deals with Chinese companies until the rules came out, while others, such as Fordhad moved forward with the partnerships despite the lack of clarity, seconds in the Wall Street Journal.

The Treasury Department referred the Daily Caller News Foundation to the DOE, which did not immediately respond to a request for comment.

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