The Department of the Treasury published Friday, March 31 its proposals concerning the conditions for the allocation of the subsidy of 7,500 dollars (about 6,800 €) for the purchase of a new electric vehicle. It opens the door to cars with batteries and components sourced from Japan and potentially, eventually, Europe.
These subsidies, provided for in the framework of President Joe Biden’s major climate plan (IRA), voted last summer, should make it possible to support the sales of electric vehicles. One part of the subsidy takes into account the place of assembly of the vehicle itself, the other the origin of the critical materials necessary for the manufacture of the battery.
The plan had been pulled off with a strong struggle, in particular after tough negotiations with Democratic Senator from West Virginia Joe Manchin, who initially opposed it and whose voice was decisive. It aims to support the automotive industry and the energy transition in the United States, by providing that a preponderant part of the vehicle and the battery must come from North America.
Japan, before maybe the EU
According to the award conditions published on Friday, which are now open for consultation and comments before final validation, states bound by a free trade agreement are also taken into account, “a term that includes recently negotiated critical materials agreements”the Treasury said in a statement.
This therefore concerns the agreement announced on Monday with Japan on the subject and, potentially, the one currently under discussion with the European Union, whose negotiations officially began during the visit of the President of the European Commission, Ursula von der Leyen. in Washington on March 10.
The Treasury Department specifies that currently 21 countries, including Japan, are affected by these new provisions. Conversely, the award conditions clearly state that they aim to exclude, as provided for when the law was passed, “suspicious entities”a term that includes Chinese companies in particular.
Senator Manchin’s Concerns
“Given China’s dominant position in the clean energy value chain, we need to work with our allies and partners to build a strong supply chain that can meet the expectations of the American consumer.”said a Treasury official.
The idea is in line with the position defended by the European Commission, which has called for this approach to be broadened beyond the G7 countries and towards countries producing critical materials, which currently export mainly to China.
Senator Joe Manchin had already expressed his concerns, before their publication, estimating Thursday, in a column published in the Wall Street Journal, that the administration “trying to put in place the law she wanted, not the one Congress passed”. Consultations on the conditions for awarding grants are open until April 17.