Under mounting pressure from foreign allies, the Biden administration may extend tax credits from the Inflation Reduction Act (IRA) to foreign vehicles from Europe and Asia, according to documents released Thursday by the Treasury Department.
The IRA has drawn criticism from South Korea, the United Kingdom, Japan and the European Union for violating pre-existing trade agreements, as the majority of their cars would fail to qualify for the $7,500 consumer tax credit for manufacturing a car in the United States, The Wall Street reported. However, these vehicles may be able to qualify for the credit if they are brought to the U.S. to be leased out or used in business, as opposed to resale, according to the Treasury Department. (RELATED: Democrats’ Massive Climate Bill Might Violate Critical South Korean Trade Deal)
Another sticking point has been an IRA regulation mandating that 40% of all “critical minerals” in EV batteries be sourced in either the U.S. or countries that have “free trade agreements” with the U.S., the WSJ reported. However, since the IRA does not define the term “free trade agreements,” the Treasury Department and the IRS anticipate that they will consider the term to include all agreements that preferentially reduce trade barriers between the U.S. and other nations, according to a document released by the Treasury Department.
Several foreign companies — such as Honda, Toyota and Hyundai — have announced, accelerated or expanded multibillion dollar investments in electric vehicle production plants in the United States after the IRA was passed in August. These, and other green energy investments, have largely poured into red states, where GOP Congressional representatives opposed the incentives offered by the IRA.
President Joe Biden met with French President Emmanuel Macron earlier this month, and suggested that the U.S. might adjust regulations to make European allies more easily eligible, the WSJ reported. The finalized rules and regulations are expected to go into effect in March, 2023.
Startups dedicated to electric vehicles have struggled especially hard this year, in some cases seeing their stock prices decline by more than 80%, compared to traditional automakers.
The Treasury Department did not immediately respond to a Daily Caller News Foundation request for comment.
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