Biden's big gamble on electric cars

Biden’s big gamble on electric cars

To that end, he and his Democratic allies in Congress recently expanded the $7,500 tax credit for electric vehicles through the Inflation Control Act, bypassing early adopters of all electric vehicle sales over the next decade.

Just two months later, no one was quite sure how many cars would qualify for the discount. Under the new law, car manufacturers should not do this Vehicles and batteries are only made in North America, but they are also a source of important minerals Which it enters from countries with which the United States has concluded free trade agreements, in an attempt to reduce the industry’s dependence on China and its allies.

Tom Smith, an Austin electric car advocate, said he was recently at a dealership looking for a new electric car and the seller couldn’t tell him, which models might qualify when the new rules go into effect next year.

“Even the merchants don’t know,” he said. “I was looking at this car that day, and the dealer said you know a lot more about this than we do.”

The shift towards electric cars has huge implications for the Texas economy, which could lead to lower demand for them Oil, which the country has produced in abundance for a long time. And while Biden may aim for a quick turnaround from internal combustion engines, domestic content requirements within the inflation-reducing law could slow that shift.

Available in 72 electric models For sale in the US, no one will qualify for the full discount as new rules go into effect in the coming years. It is unclear if and when domestic supply chains will reach the critical mass needed for automakers.

“We share the goal of increasing local capacity and supply, but the requirements should be a catalyst for changing the industrial base — not far away,” John Bosella, president of the Alliance for Automotive Innovations, a trade group, wrote in a recent blog post.

For the Biden administration, the mismatch between the law and the status quo is exactly the point.

From the administration’s point of view, the United States has become too dependent on Chinese manufacturing of clean energy technology, and now is the time to force auto companies to move their supply chains to North America. That would benefit workers here while protecting US energy security when Relations between China and the United States are becoming increasingly fraught.

To help car and battery plants along, Democrats included Advanced Manufacturing Tax Credit in Inflation Reduction Act To help offset the costs of building batteries and critical metal production facilities in the United States.

“Since January 2021, we’ve seen companies announce billions of dollars in investments in electric vehicles and batteries here in the United States,” a spokesperson for the Department of Energy said in an email. “We are confident, based on industry announcements and analyst estimates, that US battery manufacturing can grow to create more good American jobs and cover the president’s goal (the electric car).”

However, many in the industry do not share their confidence.

The list of components and materials that go into making an electric vehicle is extensive. Automakers like General Motors And the strongholdalong with Battery manufacturers such as Panasonic, reported a steady stream of new manufacturing facilities in the United States — worth $84.2 billion over the past 20 months, according to the Department of Energy. It will take time to get a high percentage of materials and components sourced from North America and US free trade partners, said Jay Hwang, senior analyst at S&P Global.

“Currently, 80 to 90 percent of global lithium processing takes place in China,” he said. “It is possible that (manufacturers) can shift battery production to North America and move supply chains around, for example, lithium produced in Australia is processed in Indonesia instead of China. But that could take five to ten years. It’s really hard to achieve One hundred percent localization.

Under the Inflation Reduction Act, any vehicle containing parts or metals from China is not eligible for the deduction.

In the meantime, car manufacturers are moving quickly to try to claim any piece of the discount on the electric car.

looking tesla To build a lithium processing facility 20 miles from Port Corpus Christi, to supply its new electric car and battery Gigafactory in Austin. And General Motors build A $400 million plant in Canada to produce battery components there.

With its low taxes and large workforce, Texas hopes to become a major player in the industry. Earlier this year, Adriana Cruz, executive director of economic development and tourism in Governor Greg Abbott’s office, She told news outlet Bloomberg that she was targeting Electric vehicle and battery manufacturers will move their operations to Texas.

But the competition is fierce. Texas recently lost to Georgia in Electric vehicle factory operated by RivianSmith, executive director of the Texas Electric Transportation Resources Alliance, said.

“We have the market and the manufacturing capacity,” he said. “It’s up to the governor and the legislature to find ways to attract them to Texas.”

james.osborne@chron.com

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