Electric car: Joe Biden’s boosts produce their first effects

Written September 15, 2022, at 07.20

“Build America, Buy America” ​​- Make and build in America. Three decisive laws for the electric car industry have been adopted since last November and the election of Joe Biden in the United States, whose common thread is the relocation of activities in the sector. President Joe Biden, who likes to introduce himself as an “auto guy,” came to tout that record Wednesday at the Detroit Auto Show, promising “good-paying union jobs” thanks to those legislative efforts.

Almost $85 billion has already been invested in local manufacturing of electric vehicles, batteries and chargers since the Biden administration took over. In a press release, the White House notes an acceleration since the beginning of the year (13 billion) and identifies 24 billion announced in batteries, “more than 28 times the investment in 2020” – certainly the year of Covid.

Tax deduction

The cornerstone of this strategy is the law on the reduction of inflation, which was adopted at the end of August. It revives and extends the tax credits for the purchase of an electric car, which had expired at the end of 2021. The offer is now valid for ten years. The maximum amount remains $7,500 per car and the cap of 200,000 subsidized registrations per manufacturer has disappeared.

In addition, a specific tax credit has been created for commercial fleets, another for the purchase of used electric cars, and the tax credit for installing an electric charger for private individuals has been renewed for ten years.

This generosity has counterparts that did not exist in the old formula. People earning more than $150,000 no longer have access to credit. The vehicle must not cost more than $55,000 (80,000 for an SUV, van or pick-up). The goal is therefore not to subsidize Tesla and its high-end models, but to ensure that as many people as possible drive electric to reach the president’s goal of 50% by 2030.

The message that needs to get across is first and foremost the message of “made in America”. Only vehicles whose battery components are not manufactured or assembled by “problematic foreign entities” will be eligible for the subsidy. They must therefore be produced in the United States or in a country under a trade agreement. Builders should be able to source lithium but could run out of nickel due to the combined market share of China, Indonesia and Russia, according to Bank of America – which in turn could reduce buying assistance.

500,000 charging stations on motorways

If the measure worries European manufacturers, their Korean and Japanese counterparts should fare well. Along with Honda, LG announced a 4.4 billion investment in electricity in the United States. Toyota reinjects 2.5 billion kroner into its North Carolina factory in Greensboro. And Samsung is planning even bigger investments in electronics, after the bipartisan Semiconductor Act. Also voted in August, it plans to allocate 52 billion to support the production of chips in the United States.

According to Goldman Sachs, the Americans Tesla and General Motors also appear “well positioned”, despite the high cost of Tesla cars, “thanks to their location and their ability to assemble on site as well as the removal of the 200,000 vehicles”, which they were reached or nearly so. Same for Toyota.

In addition, the entire electric sector will benefit from another text that was voted in November, Joe Biden welcomed on Tuesday during a press conference at the White House. “Thanks to the Infrastructure Act, we will have 500,000 electric charging stations on our highways, installed by IBEW [le premier syndicat de l’électrique du pays]. And they will all be made in America,” he said.

In fact, the implementing texts under preparation stipulate that the chargers must be produced in the United States to benefit from federal funding, and this from 2023. From 2024, they must also be manufactured with more than 55% local components.

Leave a Comment