Lobbyists for the auto industry are scrambling to justify to Senators and Congressmen why American taxpayer dollars should be used to subsidize the production of lithium, nickel, and cobalt in China. If that seems odd to you, you’re not alone. What on earth are they thinking? In their disastrous “inflation reduction” bill, Democrats actually managed to earmark electric vehicle subsidies for production happening in the U.S. Now auto industry lobbyists want to take that provision out, while still reaping the windfall taxpayer subsidies. The Wall Street Journal reports:
Major auto makers are pressing lawmakers to ease a proposed battery-sourcing requirement for electric-vehicle tax breaks, saying that few, if any, plug-in models on sale today would qualify.
The Senate climate package proposed last week would extend until 2032 a current $7,500 tax credit for electric-vehicle purchases, a consumer incentive that has been in place for more than a decade. The legislation, a deal struck between Sen. Joe Manchin (D., W.Va.) and Senate Majority Leader Chuck Schumer (D., N.Y.), could get a Senate vote by this weekend.
The bill would enhance the electric-vehicle tax credit in some ways, including making vehicles produced by General Motors Co., Tesla Inc. and Toyota Motor Corp. eligible for the subsidy again.
But the proposal would stiffen the requirements for an electric vehicle to qualify. Only U.S.-built vehicles would be eligible. It also pushes car companies to bring more manufacturing to North America, including setting minimum thresholds for the value of battery components that must be manufactured or assembled in the region. Essentially any EVs with battery components made or processed in China would be ineligible for the subsidy.
These thresholds also target crucial battery materials, such as lithium and nickel, requiring a certain percentage to be sourced domestically or from the U.S.’s free-trade partners.
Car-industry lobbyists say meeting the new requirements on batteries could take years to achieve. The majority of processing for major battery minerals, including lithium, nickel and cobalt, is done in China, according to research firm Benchmark Mineral Intelligence.
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