According to Reuters, U.S. President Joe Biden is about to sign a legislation that will eliminate electric vehicle tax credits for most models currently getting up to $7,500 credit. This is basically being done to promote US-manufactured cars.
The plan restructures the current $7,500 new electric vehicle tax credit and adds a $4,000 rebate for used EVs. It also includes new loans, tax credits, and grant programmes worth tens of billions of dollars for automakers to produce cleaner vehicles. However, the EU appears to be disappointed with Biden’s recent actions.
According to reports, the measure makes any EVs built outside of North America ineligible for tax benefits, which has riled the European Union, South Korea, and many other automakers.
EU lambastes Biden
To avail electric vehicle tax credits, Biden has set up two conditions: –
- The vehicles must come exclusively from the United States
- and the components of the battery from partner countries.
Surprisingly, the EU fails in both of these criteria and hence, Brussels feels stabbed in the back. Miriam Garcia Ferrer, the spokeswoman for the European Commission, has stressed: “We believe that this is a discriminatory measure, which disadvantages foreign manufacturers compared to American manufacturers”
The EU has also stressed that the U.S. is about to breach World Trade Organization rules if the new electric vehicle tax credits are passed and signed into law. Furthermore, the EU believes Biden did this on purpose because US autos have become increasingly ‘unpopular’ in recent times.
Biden’s love of US cars
Joe Biden has long attempted to promote American automobiles. A few months ago, he was spotted driving an electric Hummer in Detroit (United States), a powerhouse of the automobile sector that lauds American vehicles. “It’s a hell of a car”, he had commented.
Experts have constantly pitched in America that Biden’s ambition is to promote US’ EV industry. “One of Joe Biden’s first measures was to strengthen protectionism, in all sectors”, said François Durpaire, historian and specialist in the United States.
The European Union, which is making significant investments in the creation of electronic vehicles, is fiercely opposed to this policy because even before the EU’s industry is established, Biden is figuratively shutting it off.
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US Automobile Industry is declining
One wouldn’t believe it, but neither the US’s own automobile sector is doing exceptionally well. In July 2022, US passenger car sales fell 22.4% to 241,401 units, resulting in a 21.0% market share, while SUV and truck sales decreased 8.3% to 906,347 units, resulting in a 79.0% market share.
There has been a constant decline in US market share because Americans prefer purchasing foreign cars more than US-manufactured automobiles. Americans prefer foreign-built cars over domestic-built cars, according to national statistics.
The reasons behind this include the latter being more fuel efficient, lighter, and sometimes safer because of the materials that go into making them. With the exception of Tesla, the average US-designed car is simply too huge, expensive, heavy, and exhausting to drive locally.
Compared to many European and most Japanese automobiles, the build quality is below average for the majority of the vehicles. They require significantly more maintenance than Japanese automobiles and considerably more than European cars, according to the general consensus.
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Thus, As the era of EVs approaches, Biden has devised a scheme to purposely impede the entry of EU and other international automakers into the American market, so that people prefer American autos due to several tax reliefs.
