A trade dispute over electric cars is brewing between Europe and the US, over possible US reform.
Are we heading towards a new trade conflict between the United States and Europe ? This time it’s not about cheese, wine or planes, as was the case between the two economic powers in 2020, under the presidency of Donald Trump, with the episode of “punitive” customs duties . This time it’s about cars, and more specifically electric cars. Our colleagues from Figaro indicate that an upcoming reform desired by the Biden government angers Europeans over deliveries of electric vehicles.
The United States wants to favor American electric cars
At the heart of the tensions between the European Union and the United States, an amendment on tax benefits, thought up by Washington. This amendment provides in particular for a discount of $7,500 for the purchase of an electric vehicle, made on American soil. In the detail of the text, the ores and the lithium of the batteries must come from the United States. The Biden administration wants to implement this amendment from January 2023. It would thus boost the market for American electric vehicles a little more.
Europe, for its part, considers this amendment to be a “discriminatory measure for European manufacturers”. European countries are especially worried about the ability of manufacturers from the Old Continent to access the American market. For exemple, the excellent financial results of the Stellantis group had been boosted by the American market, with a very strong growth of 18%.
America has again become the Eldorado of European manufacturers, since the North American market alone represents 20% of vehicle exports in Europe. The arrival of this amendment in early 2023 could therefore weaken the exports of European manufacturers. This is why the European Commission is considering taking the matter to the WTO if this amendment were to see the light of day. We also learn from our colleagues from Figaro that South Korea (also concerned with the manufacturers Hyundai, Kia and Daiwoo) is thinking of supporting Europe in its approach.
Americans not convinced either
Across the Atlantic, the implementation of this amendment is also hotly debated. The Biden administration aims to boost US electric vehicle sales. The latter have accumulated a lot of delay on their Asian and European competitors. Joe Biden hopes above all to promote the transition of a vehicle fleet still very much geared towards combustion. The amendment would thus allow manufacturers like Ford to bring electric solutions to customers with very popular vehicles like the pick-up F-150 Lightning.
But observers of the American market point out that the implementation of this amendment could in fact weaken, a little more, the American automobile industry. Because according to the figures raised, 70% of electric models sold in the United States would not be eligible for this tax benefit. Another source of disagreement is the reduction in the commercial offer. American consumers could be deprived of access to foreign electric vehicles, in particular vehicles from Asia, which are very popular with American customers.
If the contours of the implementation of this amendment are not yet completely fixed, Europe and the United States ensure that they are in discussions on the question. The European camp hopes to find a political solution by the next G20, which will take place next November in Indonesia.