WASHINGTON (Reuters) – A U.S. trade group representing major auto makers said on Wednesday it would allow foreign investors to approve the electric vehicle (EV) tax credit portion of the $430 billion spending and revenue bill passed by the Senate on the same day. They formally protested that the restrictions on production and raw material procurement in China were too strict. It would jeopardize the industry’s target of 40% to 50% of new car sales being electric by 2030.
The industry group is the Automotive Innovation Association (AAI), with members including General Motors (GM) of the United States, Toyota Motor Corporation and Volkswagen (VW) of Germany. AAI Chief Executive Officer Bozzera said most electric vehicles would soon be out of scope if the EV tax credit requirements were activated as billed.
The regulation, which the industry is pushing back against, was proposed by Democratic Senator Manchin of West Virginia. As a deduction condition, assembly is limited to North America, and some current EVs will be disqualified if the new law takes effect. The bill would require sourcing from North America in stages to block raw materials for EV battery components from China. EVs with battery equipment that uses Chinese parts may no longer be subject to deductions from next year. Important minerals are also subject to procurement restrictions.
Manchin argued that EVs should not rely on foreign supply chains. The bill is next set for a vote in the House of Representatives on December 12.
Regarding the shift to EVs in the United States, President Biden also set a target last year for EVs or plug-in EVs to account for half of all new car sales by 2030.