Electric car: Joe Biden’s impulses take their first effects

Posted on September 15, 2022, 7:20 am

“Build America, Buy America” ​​– Make and Build America. Three decisive laws for the electric vehicle sector were passed since last November and the election of Joe Biden in the United States, whose red thread is the reallocation of activities in the sector. President Joe Biden, who likes to present himself as an “auto guy,” came to publicize this record Wednesday at the Detroit Auto Show, promising “well-paying union jobs” thanks to these legislative efforts.

Nearly $85 billion has 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 credits

The cornerstone of this strategy is the law to reduce inflation, passed in late August. Revives and extends tax credits for the purchase of an electric vehicle, which had expired at the end of 2021. The offer is now valid for ten years. The cap remains $7,500 per car, and the limit of 200,000 subsidized registrations per manufacturer has evaporated.

In addition, a specific tax credit was created for commercial fleets, another for the purchase of used electric cars, and the tax credit for the installation of residential electric chargers was renewed for ten years.

This generosity has its counterparts, which did not exist in the old formula. Individuals 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 pickup truck). The goal, therefore, is not to subsidize Tesla and its high-end models, but to ensure that as many people as possible drive on electricity to reach the presidential goal of 50% by 2030.

The message that must be conveyed is above all that of “made in America”. Only vehicles whose battery components have not been 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 the impact of purchase assistance. .

500,000 charging stations on highways

If the move worries European manufacturers, their Korean and Japanese counterparts should do well. LG announced with Honda a 4.4 billion investment in electric power in the United States. Toyota is re-injecting $2.5 billion at its North Carolina plant in Greensboro. And Samsung is planning even bigger investments in electronics, following the bipartisan Semiconductor Act. Also voted on in August, it plans to allocate 52 billion to support chip production in the United States.

According to Goldman Sachs, the American Tesla and General Motors also appear “well positioned”, despite the high cost of Tesla cars, “thanks to their location and ability to assemble on site, as well as the withdrawal of the 200,000 vehicles”, which they had achieved. or almost. Same for Toyota.

In addition, the entire electricity sector will benefit from another text voted on in November, greeted Joe Biden on Tuesday during a press conference at the White House. “Thanks to the Infrastructure Law, 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 implementation texts being prepared foresee that chargers will have to be produced in the United States to benefit from federal funding, and that, from 2023. From 2024, they will also have to be manufactured with 55% more components locations.

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