Electric car: Joe Biden’s boosts produce their first effects

Posted Sep 15, 2022, 7:20 AM

« Build America, Buy America » – Make and Build in America . Three decisive laws for the electric vehicle industry have been passed since last November and the election of Joe Biden in the United States, the red thread of which is the relocation of activities in the sector. President Joe Biden, who likes to present himself as an “auto guy”, came to tout this record on Wednesday at the Detroit Auto Show, promising “union jobs that pay well” thanks to these legislative efforts.

Nearly $85 billion has already 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 start of the year (13 billion), and identifies 24 billion announced in batteries, “more than 28 times the investment in 2020” – certainly the year of the Covid .

Tax credits

The cornerstone of this strategy is Inflation Reduction Act , passed at the end of August. It revives and extends the 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 maximum amount remains $7,500 per car, and the cap of 200,000 subsidized registrations per manufacturer has evaporated.

In addition, a specific tax credit has been created for commercial fleets, another for the purchase of second-hand electric cars, and the tax credit for the installation of a residential electric charger has been renewed for ten year.

This generosity has 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 dollars (80,000 for an SUV, van or pick-up). The objective is therefore not to subsidize Tesla and its high-end models but to ensure that as many people as possible drive electric in order to reach the presidential objective of 50% in 2030.

The message that must pass 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 could in turn reduce the impact purchase assistance.

500,000 charging stations on motorways

And the measure worries European industrialists , their Korean and Japanese counterparts should do well. LG announced with Honda an investment of 4.4 billion in electricity in the United States. Toyota is reinjecting 2.5 billion into its North Carolina plant, in Greensboro. And Samsung is planning even more massive investments in electronic components, following the bipartisan semiconductor law . Also voted in August, it plans to devote 52 billion to support the production of chips in the United States.

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

In addition, the entire electrical sector will benefit from another text voted in November, Joe Biden welcomed Tuesday during a press conference at the White House. ” Thanks to infrastructure law we are going to have 500,000 electric charging stations on our highways, installed by the IBEW [le premier syndicat de l’électrique du pays]. And they will all be made in America,” he said.

Indeed, the implementing texts in preparation provide that the chargers will have to be produced in the United States to benefit from federal funding, and this, from 2023. From 2024, they will also have to be manufactured with more 55% local components.