Biden law could set up production and demand clash for electric vehicles

By Washington Examiner
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Congress Budget Electric Vehicles
FILE – A Tesla charges at a station in Topeka, Kan., April 5, 2021. President Joe Biden and Democrats in Congress are looking to give U.S. automakers with union employees the inside track when it comes to winning the burgeoning electric vehicle market. The $1.85 trillion spending package that Democrats are trying to get through Congress includes an array of programs designed to curb global warming, including incentives to hasten the transition to electric vehicles, now about 2% of new car sales in the U.S. A provision that would give buyers of vehicles made at unionized manufacturing plants in the U.S. a more generous tax credit is sparking an international and regional political squabble. (AP Photo/Orlin Wagner, File) Orlin Wagner/AP

Biden law could set up production and demand clash for electric vehicles

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Electric vehicle sales and manufacturing demands are on the rise after President Joe Biden pushed for the largest electrification transition at the federal level.

Biden’s Inflation Reduction Act of 2022 included measures to accelerate electrification in the nation. Under the Advanced Manufacturing Production Credit, a tax credit equal to 10% of the cost of production is given to makers who use renewable materials in domestic manufacturing.

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The reduction act changed previous EV tax credit rules, adding more barriers to the threshold for qualification for vehicles purchased from 2023 to 2032. Under the new rules implemented this year, vehicles must be produced in North America to qualify for the tax credits.

These new rules could pose a threat to automakers who often depend on the credits to help with lower prices as the costs of materials needed for batteries have skyrocketed.

EV batteries are made of minerals such as lithium, which is mainly mined in places like China, Australia, and Chile. EV batteries could face a shortage if mining companies lack lithium supply due to foreign control.

The demand for batteries for vehicles in the United States rose by around 80% in 2022 when compared to 2021, according to an analysis from the International Energy Agency.

Additionally, the Biden administration passed the Bipartisan Infrastructure Law providing incentives in a $7.5 billion plan for EV charging networks nationwide.

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Seven major automakers announced on Wednesday they would be joining a public charging network joint venture in an effort to install more charges in urban areas and highways. BMW Group, General Motors, Honda, Hyundai, Kia, Mercedes-Benz, and Stellantis plan to install at least 30,000 chargers in the U.S. and Canada.

Tesla opened its charging stations to non-Tesla vehicles earlier this year to take advantage of Biden’s subsidies.

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