US Excludes Non-US Batteries from Electric Car Subsidies

Electric car: No US subsidies for cars with non-US batteries

The US government’s location policy for the auto industry, known as the Inflation Reduction Act (IRA), is having consequences for imported electric cars and those manufactured in the USA with batteries from abroad. The government tax credit of up to $7,500 will benefit only a few models in the future. Subsidies for e-vehicles from BMW, Volkswagen, Nissan, Rivian, Hyundai, and Volvo will no longer exist due to new conditions for battery production effective immediately. The tax breaks now depend on the proportion of vehicles manufactured in North America and the extent to which battery components and important raw materials come from the USA or certain trading partners.

The goal of these new conditions is to reduce battery dependency on China. A VW of America spokesman said that they were optimistic the VW ID.4 e-model would still get tax premiums. Audi, which is part of the Volkswagen Group, is planning to relocate part of its production to the United States. The new subsidies are part of the billion-dollar Inflation Reduction Act, which is aimed at strengthening domestic industry.

Currently, only ten models qualify for the full $7,500 reward, and they come from the largest US car manufacturers General Motors, Ford, as well as Tesla and Stellantis. The Treasury Department reduced the premium for the standard version of the best-selling Tesla Model 3 by half to $3,750.

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