Major automakers Ford and General Motors are at odds over potential restrictions to federal tax credits for newly-produced electric vehicles (EV) that utilize Chinese components, The Wall Street Journal reported Wednesday.
Ford and GM disagree on whether the Biden administration should deem Chinese-made EV batteries as “foreign entities of concern,” barring them from receiving tax credits, hurting Ford, which wishes to use the Chinese products to lower operating costs, while GM believes that the use of the batteries could impose Chinese dominance on the U.S. EV market, according to the WSJ. The Biden administration is expected to finalize rules for a $7,500 tax credit per EV as a feature of the Inflation Reduction Act (IRA), which was signed into law in August 2020 and included $740 billion in new spending with $370 billion dedicated to green energy subsidies and tax credits. (RELATED: Biden Admin Looked To Placate Auto Workers With Massive $15 Billion ‘Union-Focused’ Spending Package)
“Ford believes that excluding batteries made in America by an American company and American workers from consumer tax credits would be contrary to both the letter of the law and to U.S. interests,” Ford said in a statement to the Daily Caller News Foundation. “Bringing battery manufacturing home to the U.S., which Ford is doing, is good for Ford’s customers and business and good for our country.
Ford, barring a restrictive rule by the Biden administration, plans to license the more advanced Chinese battery technology, which would enable the company to manufacture cheaper iron-based batteries, according to the WSJ. GM does not have plans to use the cheaper Chinese battery technology and would be disadvantaged by its use by other EV manufacturers due to higher costs.
“This is not about GM vs. Ford,” GM said in a statement to the DCNF. “Our ask has always been about clarity of the FEOC rules, encouraging Treasury to implement rules that follow the intention of the IRA, to help to onshore and near-shore EV supply chains, expand job opportunities and offer EVs across a broad range of segments and price points. This was reflected in our 2022 and 2023 filed comments where we clearly state ‘Scope is important, but clarity is key.'”
China’s dominance of the transition to electric vehicles is the latest source of geopolitical tension with the US and Europe, where policymakers face a costly catchup effort to avoid long-term dependency.
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Ford announced that it would be pausing the construction of a new EV battery plant that it was building in Marshall, Michigan, on Monday, saying that the company will resume work on the project once Ford is confident in its ability to operate the plant competitively.
The two automakers are both the target of a partial strike from the United Auto Workers that was announced on Sept. 14 and was expanded on Friday, striking at a total of 41 plants across three companies, including another automaker, Stellantis. As a part of its demands, the union is seeking assurance that the quality of jobs will be preserved as automakers expand their EV operations, shifting focus away from their traditional operations.
Ford and GM did not immediately respond to a request to comment from the Daily Caller News Foundation.
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