Automakers hurry to make EV batteries in the US after the climate policy passes. Even though the Inflation Reduction Act (or “climate bill”) has only been legislation for a little over two weeks, its positive impacts on the US economy have already begun to show. Automakers from across the world are in a mad dash to find suppliers and set up assembly lines in the United States so they can take advantage of the new tax incentives included in the climate bill.
Tax incentives created by the climate bill lower the entry barrier for consumers interested in switching to renewable sources of power.
The introduction of a tax credit for buyers of electric vehicles is particularly noteworthy. The law includes a tax credit of up to $7,500 for new EVs and $4,000 for used EVs for buyers.
Nonetheless, in order for a car company’s EV to qualify for the rebates, it must undergo final assembly in North America. The company must also import all components used in the EV batteries from either North America or its free trade partners.
The program has accomplished a lot in just two weeks, including bringing manufacturing jobs back to the United States and stimulating the economy. Since the climate bill was signed, major automakers like Mercedes-Benz, Volkswagen, Honda, and Hyundai have all announced agreements to source EV components in North America.
New ‘gold rush’ in the United States thanks to climate change legislation.
Travelers from all over the world flocked to California in 1848 to take part in the so-called “gold rush,” which was sparked by the discovery of gold in Sacramento Valley.
People from all over the world abandoned their plans to head to the California coast in the hopes of finding their riches.
A similar situation applies to the automotive industry, which is actively prospecting for riches in the United States. The automotive industry is in a state of flux following President Biden’s signing of the new climate bill.
Since the passing of the Inflation Reduction Act, a number of significant changes have occurred.
Hyundai was previously intending to make EVs in the US, but the company is apparently thinking about moving up the date at which it would begin building on its specialized EV factory in Georgia from 2023 to later this year.
Both Volkswagen and Mercedes-Benz committed to using Canadian raw materials for their EV battery production. Premier of Canada Justin Trudeau and German Chancellor Olaf Scholz were present for the historic signing.
Rock Tech, a Canadian mining business, has been named as the supplier of choice for Mercedes-announced Benz’s 10,000-ton lithium order.
Honda and LG Energy are joining together to create a new company. The 40 GWh yearly capacity is based on the JV’s $4.4 billion investment in a new battery factory in the United States.
The story has hardly begun to unfold. Numerous automakers, including Volkswagen, Mercedes-Benz, Hyundai, and Honda, are vying for a piece of the lucrative US EV market.
Vice President Biden has mandated that the United States increase the percentage of EV sales to 50 percent by the year 2030. Government and industry funding is needed to get there. But the climate bill is working as planned, bringing the future of the car business to the US as EV manufacturers compete for market share.
Considerations from Electrek.
We are already experiencing the good benefits of the climate bill only two weeks after it became law.
I bet you didn’t realize that in the years following WWII and the Great Depression, the United States became the world’s largest producer of automobiles. Automakers originally saw the United States as the promised land. As a result of rising gasoline prices and increased competition from abroad, the US auto sector began to decline.
For the time being, it appears that the United States will once again be the global leader in automobile production. But this time, car companies are locking down contracts for essential electric vehicles (EV) and battery components with an eye toward the future.