New Year, but no full EV tax credits
Why did the Biden Administration blink?
Joe Biden wants you to buy an electric vehicle (EV). That’s why the President made sure that his Infrastructure bill and what they call the Inflation Reduction Act both included incentives for manufacturers and buyers of EVs.
For the consumer that meant a tax credit of up to $7,500 if you buy the right car. It was all supposed to go into effect on January 1, 2023. It’s not happening.
CONTINENTAL PUSHBACK
A funny thing happened on the way to January First. Do you remember the big White House State Dinner in early December with French President Emanuel Macron? It was first State Dinner President Biden hosted. He got an earful.
The Europeans, especially Macron, are unhappy with the “made in America” requirements for those credits. In order for you to get the full $7,500, the EV must be assembled in the US and the contents of its battery must include a percentage of components and minerals mined and refined in the US.
That means VW, BMW, Mercedes, Fiat, Renault and other European carmakers will be at a disadvantage. Would you buy that German-made EV, or one assembled in the US by Ford or GM and get the $7,500 tax credit?
MACRON COMES TO TOWN
That is why Macron came to the US (as well as discussing Ukraine and other bilateral issues), to plead his case to Mr. Biden that these EV incentives are neither fair, nor friendly.
Macron was very vocal before his White House meetings, telling ABC’s George Stephanopoulos that the EV tax credits are protectionist. He described the subsidies as, “very good for the U.S. economy, but they weren’t properly coordinated with European economies,” adding, “They create just the absence of a level playing field.”
The two Presidents met and afterwards both suggested progress was made on the issue of EV incentives. A joint statement said, “They look forward to the work of the U.S.-EU Task Force on the Inflation Reduction Act to further strengthen the U.S.-EU partnership on clean energy and climate through mutually beneficial ways.”
So it sounds like Macron had an impact. How much? Well, a couple weeks later Macron watched the French National team lose the World Cup to Argentina. He had to console the French team after the game. It was a devastating loss.
THE BIG WIN?
But the next day brought a major victory for the French President. The United States Treasury Department quietly announced that it would not issue a rule for that tax subsidy on battery content by January First as it had promised. The Biden Administration put off any announcement until March. Macron gets a reprieve and you won’t get a full tax credit on a new EV purchase between January First and sometime in March, if even then.
Why did the Treasury Department delay the rule and therefore a big chuck of the tax incentive? I asked. The Treasury Department media relations team did not respond.
TREASURY BLINKS
In a release the Department said only, “Treasury will issue a notice of proposed rulemaking (NPRM) in March with proposed guidance on the critical minerals and battery components requirements.”
As for the cause for the delay the statement only says, “Treasury has worked expeditiously to write the rules that will make real the promise of this legislation.”
Something is afoot. Will you be able to get the full 7,500 bucks in March? Will some European vehicles suddenly qualify?
Maybe Macron knows.
Interesting the entanglements of the international economy!