European Union: ‘American EV subsidy unfair’

The American EV subsidy is part of the ‘Climate and Energy Bill’, a $430 billion package that is intended to accelerate the energy transition in the United States. American consumers will then receive a tax benefit of approximately USD 7,500 on cars that do not emit CO2 locally. However, there is a ‘but’: only cars whose battery materials come from the United States are eligible for the subsidy. That means that by far most European and Asian EVs are left out. This condition is included to make the EV industry less dependent on China and to promote local investment in mining the necessary raw materials and manufacturing the batteries.

However, those conditions are unfair, said Miriam Garcia Ferrer, spokesman for the European Commission. “We believe this discriminates against foreign producers against US producers,” she said. “Of course that would also mean that this is not in line with WTO trade rules.” The EU does agree with the US government that some form of subsidy is given to EVs, but the measure must then be fair and non-discriminatory in nature. “We therefore continue to emphasize to America that these discriminatory elements must be removed from the law so that it fully complies with WTO rules.”

American car manufacturers are working hard to set up production facilities for EV batteries themselves, but in many cases also work together with foreign parties. Tesla buys some of its batteries, for example, from the Chinese CATL and the Japanese Panasonic. Cars with those batteries would then not qualify for the tax benefit under the current proposed rules.