| 28 March 2023, Tuesday |

EU pushes against ‘Made in USA’ rule for EV support

Even as the two sides approach an agreement on raw materials, the European Union is attempting to persuade the United States to relax the requirement that electric vehicles be “Made in the USA” in order to qualify for tax benefits, a senior EU official revealed on Thursday.

For consumers purchasing electric vehicles, Washington is offering tax credits of up to $7,500, but only if the final assembly and battery components totaling at least 50% of the value are built in North America.

European Commission Vice President Valdis Dombrovskis, who oversees EU trade policy, said discussions were continuing on these local content requirements and that the EU wanted to establish how battery components were defined.

“Is it only specific battery components or everything? And indeed that was a subject of discussion with Treasury Secretary Yellen last Thursday. So there the work is ongoing,” he told a briefing in Stockholm before a ministerial meeting on trade.

The Treasury Department is due to set guidelines later this month.

“They need to respect the letter of the law, but still there’s room for manoeuvre,” Dombrovskis said.

A further criteria for the tax credit is that a large share of critical materials comes from a U.S. free trade agreement (FTA) partner, which the European Union is not.

The United States and the European Union are nevertheless working towards a deal to make European minerals eligible for tax credits, a senior EU official said on Friday. The EU would be considered as having “FTA-equivalent” status.

  • Reuters