USA: E-car subsidy only with domestic battery
The United States has decided on a new subsidy for electric vehicles. However, only 30 % of all electric vehicles currently meet the requirements to benefit from the subsidy.
After lengthy negotiations to find a compromise in the Senate, Capitol Hill finally reached a compromise on the stimulus and climate package. At the end of July, the new draft of the legislative package supported by US President Joe Biden was announced. Unlike the first proposal, it would not include production bonuses for unionised factories. Instead, the measure would focus on growing the US car market for electric vehicles through financial support - and at the same time promote domestic production of electric car batteries.
More stringent, however, are the requirements that customers must meet in order to benefit from the planned 7500 dollar tax credit. The tax credit will not apply to all electric cars, but only to vehicles with at least 40 % of battery components produced in North America. This minimum share is to be further increased to 50 % of the components from 2024 onwards.
Thus, US policy not only wants to put more e-cars on the road, but above all to position the country as the market leader in the production of car batteries. To this end, electric car manufacturers will have to meet specifications on the origin of battery materials in the future. This is to ensure that the entire supply chain for battery raw materials and materials originates in the USA and with close trading partners. What sounds simple could, however, only prove feasible after years of building up industrial capacity in the battery sector. The US battery industry is currently too undeveloped. Only 0.16 % of global cathode production and 0.27 % of anode production are made in the USA.
Furthermore, the effects of the package of measures will most likely only be felt by customers after some time, as even 70% of all electric vehicles do not currently qualify for the subsidies according to manufacturers. And this is not only because of the origin requirement for materials used in battery production, but also because of price caps, according to which some models would be too expensive for state subsidies. Even for big names in the electric car market like Tesla, it could be difficult to get subsidies for their own models. The problem is that the purchase costs for potential customers are too high, as well as the use of battery parts imported from China.
If the climate package is officially signed by Congress and the presidency in the coming weeks, as expected, only about 11,000 electric cars will receive subsidies at first. Only with time and continuous adjustments in the US battery industry - and in the domestic manufacturing chain of Stromer - will it be possible to assess the effectiveness and profitability of the government plan. Will this principle of the subsidy programme rub off on other countries?