Automakers say climate bill sets impossible target


Automakers are pursuing an ambitious plan Democrats are moving to reduce the cost of electric cars and accelerate the transition from gas-powered vehicles.

The Senate climate package, set for vote earlier this week, includes tax credits that slash the cost of electric cars by thousands of dollars — but only for buyers who buy from it Companies that trace their supply chain from China and other countries with which the United States do not have a free-trade agreement. This is a heavy lift for an industry that has limited access to the minerals and components critical to the production of EV batteries.

Deadlines in the measure, some auto companies and trade groups say, may be impossible to meet. They are lobbying reluctant lawmakers to raise them. The push has divided clean-vehicle proponents, with some advocating for looser guidelines to get more electric cars on the road quickly, as others argue the provisions are meant to shore up a dangerously unstable supply chain. are important for.

The controversy underscores the enormous challenge facing the United States in its attempt to take back control of production lines at a critical moment in the energy transition.

“Incentives that qualify for little or no vehicles are not what car buyers expect and will not advance the Biden administration’s goals on vehicle electrification,” said Dan Ryan, vice president of government and public affairs at Mazda North America.

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Autos Drive America, a trade group representing 11 international auto companies, is also expressing concerns. Group chief executive Jennifer Safavian said in an email, “We encourage Congress to refrain from any policy that impedes electric vehicle production, hinders consumer adoption, and helps achieve our shared climate goals.” makes it more difficult to do.”

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But there are also risks of not proceeding as aggressively as the bill proposes. China’s dominance over existing supply chains could mean that incentives paid by US taxpayers would increase profits for Chinese companies, further tightening its control over the industry, and a growing threat to US national security and energy independence. risk will arise.

“The United States is in a position to change behavior and create a domestic industry here,” said Ben Steinberg, head of the Battery Materials and Technology Coalition. “We have the resources here. We are with the allies on this. We need to act fast because we depend on foreign adversaries for things that are important to our way of life. Those are tough goals, but They can be achieved.”

The Senate measure, part of the Inflation Reduction Act, would prompt auto companies to immediately source their minerals and components from the US or 20 of its free-trade-agreement partners, which include major mining and manufacturing centers such as Japan, Argentina and the European Union. are not. Until 2025, credit-seeking car makers will not be allowed to obtain any of their materials or components from China, which includes vast mining operations controlled by Chinese companies around the world.

Some analysts predict that the rules will disqualify buyers of most electric car models from making claims. $7,500-per-vehicle tax credit. The best-positioned companies are like Tesla, which began moving long ago to bring supply chains to the United States. Huge constraints are faced by companies such as Toyota, which is the industry most dependent on supply chains that do not meet the guidelines set forth in the climate law. Neither company responded to a request for comment.

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The major champion of restrictions on tax credits is Sen. Joe Manchin III (DW.Va.), who played a key role in negotiating the act. Manchin has cast doubt on incentives for electric vehicles, which are already sold out of showrooms while being too expensive for middle- and low-income drivers. He has also expressed concern that China exercises so much control over the production line.

Speaking to reporters on Tuesday, Manchin did not appear to be impressed by the concerns of the automakers.

“Narrate [automakers] To be aggressive and to make sure we’re doing extraction in North America, we’re processing in North America and we put a line on China,” Manchin told Reuters. That we should build a transportation mode behind foreign supply chains. I’m not going to do that.”

The offer renews an existing $7,500 credit for electric cars that have some strings attached but is no longer available for even the most popular car models. It is phased out for each carmaker after 200,000 electric vehicles are sold.

But the measure also includes billions of dollars in new government investment to help companies move their supply chains.

“It doesn’t just set hard metrics and say, ‘good luck’,” said Joe Britton, executive director of the Zero Emissions Transportation Association. “I think it gives us a way to get these supply chains out of Asia. It’s just a matter of how quickly we can do it.” The association is joining car companies and urging lawmakers to reduce the deadline for moving onshore the mining, processing and assembly activities involved in battery production .

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“Every six months we can push this back, giving people time to get these supply chains out of Asia,” Briton said. “We want as many vehicles and consumers to be eligible for these credits as possible.”

Those urging lawmakers to stay firm on supply chain targets in the bill say automakers are overestimating their ability to slow the transition to zero-emissions cars and SUVs. Among them is Morgan Bazillion, director of the Payne Institute at the Colorado School of Mines, who says lawmakers and industry have too long neglected supply chain instabilities that are rapidly becoming a potential threat to the energy transition.

“It’s a good thing to have these goals,” Bazillion said. “If we bill these ambitious – even heroic – goals and no one is able to meet them, there is flexibility for agencies to adjust them later. We see that This happens with all kinds of policies, and it is no different. There is always flexibility in the implementation phase.”