Electric vehicle tax credits help China

Are Chinese automakers benefitting from the Inflation Reduction Act's tax credits for new electric vehicle purchases? Deputy Treasury Secretary Wally Adeyemo says "no."

"What we see to date is that the companies that are taking advantage of it are American companies who are using it to make the investments that they need to be able to build out the cars of the future, which are electric vehicles," Adeyemo said at a hearing on federal EV incentives held by the Senate Committee on Energy and Natural Resources.

"My problem is not with EVs. My problem is with my administration's crusade to convert everyone over to an EV ..."

What role Chinese automakers play in this future depends on how strictly the Biden administration enforces a provision that blocks tax credits for new EVs that contain battery materials from foreign adversaries such as China.

More than 7,000 dealers registered to offer point-of-sale EV tax credits for 2024 under section 30D of the Act. But since January 1, any new EV using battery components made or assembled by a "foreign entity of concern" (companies or subsidiaries owned or controlled by China, Iran, North Korea, or Russia) have been ineligible for these credits.

In 2025, the exclusion will expand to include the use of any critical minerals that are extracted, processed, or recycled by one of those entities.

The Truth About Chinese Automakers and EV Tax Credits youtu.be

Ostensibly the regulations try to strike a balance, leaving some room for Chinese involvement as automakers reshuffle their supply chains into compliance. A too-strict interpretation of the term could have prevented any EVs from qualifying, while a too-lenient approach could risk national security and undermine domestic automakers.

That said, the requirements are strict enough to have slashed the number of qualifying models from 25 to just 13, according to federal data from FuelEconomy.GOV. However, some automakers such as General Motors have said they expect more EVs will qualify as they adjust sourcing.

“Section 30D is helping Ford and GM be able to be in a position to not only compete with Chinese automakers … but to win not only here in the United States but around the world," Adeyemo said.

The Biden administration has faced harsh criticism for its implementation of the EV tax credits, namely from Republicans — none of whom supported the Inflation Reduction Act — and Senator Joe Manchin (D-W.V.) who held the key vote in passing the law and helped write it.

Manchin, who chairs the Senate Energy Committee, has blasted the administration for not going far enough in preventing loopholes that could benefit China, which dominates the EV battery supply chain.

At issue, in part, is the Treasury's foreign entity guidance, which includes a temporary transition rule through 2026 that gives the industry time to develop standards for tracing materials that account for less than 2% of the value of battery-critical minerals.

"My problem is not with EVs," Manchin said at the hearing. "My problem is with my administration's crusade to convert everyone over to an EV regardless of where the battery came from or what the law actually says."

Republican senators on the panel, including ranking member John Barrasso of Wyoming and Josh Hawley of Missouri, also scrutinized the administration's implementation of the tax credit and the potential for Chinese participation.

"Your rule allows Chinese companies to get the tax break. It loosens up the restrictions, so now we are subsidizing our rivals," Hawley argued.

Deputy Energy Secretary Dave Turk, who also testified at the hearing, defended the administration's approach.

"I would strongly disagree with that," said Turk, citing how fewer EVs are now eligible for the credit as automakers scramble to adjust their sourcing and meet the requirements.

Manchin, who last year said he would sue the Treasury over how it was planning to interpret the EV tax credit's critical mineral and battery component provisions, again threatened legal action.

He said, ”I will support any entity that goes to court to correct the illegal liberalization of this law with an amicus brief to set the record straight on the bill Congress actually wrote.”

California Is About To Make Us All Drive So Slowly We Won’t Want To Drive At All

The latest nuttery from one of the commissars of California matters not just to the Golden State, but to the other 49.

NASCAR Makes Big Changes As It Begins 2022 Season That Include More Politics

While claiming to ban political advertising, the sport announced a partnership that many conservatives might find distinctly political in nature.

Biden to sign executive order targeting 50% of all cars sold in the US be electric vehicles by 2030

President Joe Biden unveiled new targets for zero-emission vehicles Thursday. President Biden will sign an executive order calling for 50% of all cars sold in the U.S. to be electric vehicles by 2030.

"The President will sign an Executive Order that sets an ambitious new target to make half of all new vehicles sold in 2030 zero-emissions vehicles, including battery electric, plug-in hybrid electric, or fuel cell electric vehicles," the White House said in a statement released Thursday. "The Executive Order also kicks off development of long-term fuel efficiency and emissions standards to save consumers money, cut pollution, boost public health, advance environmental justice, and tackle the climate crisis."

Between 2017 and 2020, electric vehicles only accounted for "about 2% of the U.S. new-car market," the Pew Research Center stated. In 2020, electric vehicle registrations in the United States reached a record market share of 1.8%, based on data collected by industry analysts at IHS Market.

Electric vehicles typically cost more than gas-powered cars. According to data analyzed by research house Cox Automotive and published in Quartz, the median retail price for all vehicles in the U.S. was $36,600 in 2019, but electric vehicles had an average price tag of $55,600.

The Biden administration said the executive order is a "goal to leverage once-in-generation investments and a whole-of-government effort to lift up the American autoworker and strengthen American leadership in clean cars and trucks."

The Biden administration will also propose new fuel efficiency and vehicle emission standards for "light-duty vehicles — cars, pickups and SUVs — through model year 2026," according to Axios.

"Auto industry officials expect the White House to announce rules mandating a 3.7% annual increase in fuel efficiency for the next two years," the Wall Street Journal reported.

The White House statement said the Environmental Protection Agency and U.S. Department of Transportation's National Highway Traffic Safety Administration will "announce how they are addressing the previous administration's harmful rollbacks of near-term fuel efficiency and emissions standards."

"The two agencies' standards work in a compatible fashion through model year 2026, with the NHTSA proposed rule starting in model year 2024 and the EPA proposed rule taking effect a year sooner with model year 2023," the Biden administration said.

The standards will be built on the "California Framework Agreement," a nonbinding commitment that was finalized last August with automakers — BMW of North America (including Rolls Royce for purposes of the agreement), Ford, Honda, Volkswagen Group of America (including VW and Audi), and Volvo – that "support continued annual reductions of vehicle greenhouse gas emissions through the 2026 model year, encourage innovation to accelerate the transition to electric vehicles, provide industry the certainty needed to make investments and create jobs, and save consumers money."

In March 2020, President Donald Trump's administration rolled back the vehicle emissions standards that former President Barack Obama enacted. The Trump administration said the more lenient standards would save automakers upward of $100 billion in compliance costs, Reuters reported at the time.

Bloomberg gave an idea on Biden's standards, "The standards, drafted by the Environmental Protection Agency, would be patterned on a compromise some automakers, including Ford Motor Co. and Volkswagen AG, reached with California regulators two years ago – rather than the tougher mandates charted by former President Barack Obama in 2012, according to the people, who requested anonymity to discuss the plan before it is made public."

Ray Curry, the president of the International Union, United Automobile, Aerospace, and Agricultural Implement Workers of America (UAW), reacted to the Biden initiatives by saying, "We are at a critical time for the auto industry as countries compete to build the vehicles of the future. We are falling behind China and Europe as manufacturers pour billions into growing their markets and expanding their manufacturing. We need to make investments here in the United States."

"Today's announcement on emissions standards brings more certainty and better planning for the auto industry and UAW member future jobs," Curry added. "While the UAW notes that the companies have made voluntary commitments on Electric Vehicles, the UAW focus is not on hard deadlines or percentages, but on preserving the wages and benefits that have been the heart and soul of the American middle class."

In a joint statement, the new standards are supported by automakers General Motors, Ford Motor, and Stellantis, which is formerly Fiat Chrysler:

Today, Ford, GM and Stellantis announce their shared aspiration to achieve sales of 40-50% of annual U.S. volumes of electric vehicles (battery electric, fuel cell and plug-in hybrid vehicles) by 2030 in order to move the nation closer to a zero-emissions future consistent with Paris climate goals. Our recent product, technology, and investment announcements highlight our collective commitment to be leaders in the U.S. transition to electric vehicles. This represents a dramatic shift from the U.S. market today that can be achieved only with the timely deployment of the full suite of electrification policies committed to by the Administration in the Build Back Better Plan, including purchase incentives, a comprehensive charging network of sufficient density to support the millions of vehicles these targets represent, investments in R&D, and incentives to expand the electric vehicle manufacturing and supply chains in the United States. With the UAW at our side in transforming the workforce and partnering with us on this journey, we believe we can strengthen continued American leadership in clean transportation technology through electric vehicle innovation and manufacturing. We look forward to working with the Biden Administration, Congress and state and local governments to enact policies that will enable these ambitious objectives.

BMW, Ford, Honda, Volkswagen, and Volvo issued a joint statement regarding Biden's new automobile goals:

We were proud to stand with California to establish progressive new greenhouse gas regulations, and we remain committed to leading the industry in fighting against climate change. That's why we support the Administration's goal of reaching an electric vehicle future and applaud President Biden's leadership on reducing emissions and investing in critical infrastructure to achieve these reductions. While the California framework companies are driving towards 40-50% of our sales being EVs in the next nine years, bold action from our partners in the federal government is crucial to build consumer demand for electric vehicles and put us on track to achieve the global commitments of the Paris Climate Agreement. That includes a strong nationwide greenhouse gas emissions standard, continued investments in charging infrastructure, and broad consumer incentives for all electric vehicle purchases.