√Proposed US electric-car cash-back incentive labelled “discriminatory”, could violate trade rules
The European Union and South Korea claim a new electric-car rebate in the US could breach trade regulations, as the proposed $US7500 incentive is only available for vehicles built in North America.
The US has been accused of breaching World Trade Organisation (WTO) regulations if it legislates a proposed electric-car rebate which only applies to vehicles built in North America.
According to a report by news agency Reuters, the European Union and South Korea believe the US is violating WTO rules and free-trade agreements by not allowing electric cars built in regions outside North America to be eligible for the same subsidy.
Last week, the US Senate passed a $US7500 ($AU10,750) rebate on electric cars built in North America as a part of its $US430 billion ($AU604 billion) climate and energy bill.
The proposed legislation – known as the Inflation Reduction Act – will come into immediate effect if it is passed by the US House of Representatives and signed by President Joe Biden.
By January 2024, the legislation also will require at least 40 per cent of the materials for electric car batteries to be sourced in North America – or from a trading partner of the US – to be eligible for the rebate.
This will increase by 10 per cent every year, eventually reaching 100 per cent North American and US trade partner materials in 2030.
European Commission spokesperson Miriam Garcia Ferrer told news agency Reuters the incentive was discriminatory against cars made outside North America.
“We think it’s discriminatory, that it is discriminating against foreign producers in relation to US producers,” said Ms Garcia Ferrer.
“Of course this would mean that it would be incompatible with the WTO. We need to ensure that the measures introduced are fair and non-discriminatory.”
The report by Reuters also claims the South Korean trade ministry has asked the US to remove the requirement for eligible electric cars to be made in North America.
South Korea has additionally requested for the US to remove proposed restrictions on the source of battery materials from the legislation.
US publication The Verge reports 76 per cent of all lithium-ion electric car batteries worldwide are sourced from China.
By contrast, the US accounts for just eight per cent of the world’s electric car batteries.
While there is an existing $US7500 rebate available to new electric car buyers in the US, it is applicable to the first 200,000 electric cars sold per car maker – a sales figure which has been surpassed by Tesla, General Motors and Toyota.
Based on research by The Verge, there are 72 electric cars in the US which are eligible for the current rebate – applying to fully-electric cars, hydrogen fuel cell electric vehicles and plug-in hybrids.
If the new legislation is approved by President Biden, 70 per cent of the electric cars on sale in the US will not be eligible for the rebate under the new conditions.
When the restrictions on battery material supply are applied, no electric cars currently on sale in the US would be eligible.
In 2021, US President Joe Biden signed a non-binding executive order which outlined a target of 50 per cent electrified vehicle sales in the US by 2030.
Throughout the first three months of 2022, electrified vehicles accounted for 4.6 per cent of overall new-car sales in the US.
While all Australian states and territories offer some form of incentive for electric car buyers, the Federal Government is yet to implement a uniform, nationwide policy.
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