The Hill sweats Biden’s next move on electric cars

Source: By ARIANNA SKIBELL, Politico • Posted: Wednesday, March 29, 2023

Is it better to vex members of Congress or America’s allies?

That’s the choice the Biden administration faces this week as it prepares to release guidance on who can qualify for the generous electric vehicle tax credits tucked inside the Inflation Reduction Act.

And some lawmakers across the political spectrum are increasingly concerned that President Joe Biden will cast aside their intentions in order to pursue his international priorities, write POLITICO’s E&E News reporters Timothy Cama and Hannah Northey.

Last year’s landmark climate law includes up to $7,500 in tax credits for each EV, but the full incentive is available only for cars and batteries assembled and largely produced in North America. Mineral components must be sourced from the U.S. or a free-trade partner.

The provision — which helped secure the critical vote of Democratic Sen. Joe Manchin of West Virginia — was intended to foster a domestic supply chain for EVs, reduce dependence on Chinese suppliers and create thousands of new jobs.

But it also angered European governments that complained the measure violates trade agreements by denying their companies access to the full tax credits. Companies in Europe have also threatened to leave the continent and open factories in the U.S., posing an existential threat to European industry.

An olive branch for Europe?
As Zack Colman scooped for POLITICO last week, the administration is holding out some hope for Europe to share in the EV bounty — though no such concessions are expected to make it into the draft guidance that the Treasury Department is set to announce by Friday.

Treasury hinted at such an approach in a white paper late last year, indicating it might bow slightly to European pressure by adopting an expansive definition of which countries have a “free trade agreement” with the United States. The U.S. and EU are in talks right now that could reach a limited trade deal.

Amid all this intrigue, even some strong Biden allies are questioning the administration’s transparency on its discussions with other countries about EV components.

Democratic Sen. Ron Wyden of Oregon, for example, said any critical minerals agreement should be made public before it’s signed.

Republicans have also aired concerns about the administration unilaterally drawing up trade agreements without congressional approval. And manufacturing and union lobbyists are warning that U.S. jobs could be at stake if they open the door to minerals from other countries.