Battery materials supply forces rethink of EV incentives, CATL suspends plans for North America

As expected, the inflation-cutting bill and its electric vehicle incentive package are stirring political waters in Washington as those who love the bill fight to pass it and those who don’t. don’t like the bill are fighting to get it changed. Either way, now is the perfect time to be a lobbyist in the nation’s capital.

Reuters reports that several automakers are upset about sourcing requirements for battery components and critical minerals that must be met for the vehicles they manufacture to qualify for the proposed incentives, which include a $7,500 rebate at the point of sale for cars and light trucks and a $40,000 rebate for heavy trucks over 14,000 pounds.

Don’t make a mistake. This proposed electric vehicle incentive legislation is about politics and how the United States has stood idly by while China has emerged as the dominant force in battery materials and solar panel manufacturing over the past few years. last 20 years. The bill aims to correct this imbalance, but many in the industry say it goes too far, too fast.

Those of us who have been covering the auto industry for a while will hear echoes of previous calls from the industry to slow the implementation of things like seatbelts, airbags and economy standards fuel. Manufacturers always want more time. That’s what they do. But in this case, there may be some merit to their concerns.

Incentives for electric vehicles raise concerns

Rivian is particularly upset. It says the proposed electric vehicle tax credit “will cut the rug for consumers considering buying an American-made electric vehicle” and that “the final package must extend the transition period.” GM said Friday that “some of the provisions are difficult and cannot be achieved overnight,” but added that it was “encouraged by the framework set out in the legislation.”

Privately, automakers say percentage targets for supply of critical minerals and battery components are too high and growing too quickly. Debbie Stabenow, a senator from Michigan, said Reuters Tuesday, “It’s a very heavy and unenforceable credit once all the restrictions have been put in place. There are conversations going on.” She noted, however, that the bill includes billions of dollars in new loans and grants for automobile and battery production and credits for commercial vehicles.

The bill includes increasing requirements for the percentage of North American battery components by value to qualify for electric vehicle incentives and would ban all batteries after 2023 with Chinese components. Last week, Senator Marco Rubio sought to further toughen standards to ensure that EV credits can only apply if critical EV battery minerals come from the United States or a country with which the United States United have a free trade agreement.

Rubio’s amendment could be a “poison pill” ploy designed to force some Democrats to vote against the bill. So far, not a single Republican senator has had anything positive to say about the bill, even though it would be an important first step in helping the United States regain its leading role among the nations of the world on climate change.

Manchin mocks changing incentives for electric vehicles

For his part, Joe Manchin, the coal senator from West Virginia who negotiated the new legislative package with Senate Majority Leader Chuck Schumer, has shown no interest in making changes to the proposed legislation. “Tell (the automakers) to be aggressive and make sure we mine in North America, we process in North America, and we put a line on China,” Manchin told reporters. “I don’t believe we should build a mode of transport on the back of foreign supply chains. I won’t.

He added that the United States was building its own gasoline vehicles and engines. “Now, all of a sudden, we can’t? Come on.” This statement illustrates how little Manchin understands about the world of manufacturing. The truth is that Tesla makes the cars with the highest American content of any automaker, but even it sources materials from around the world. GM, Ford, Stellantis, Volvo, Mercedes, Kia, Hyundai and others also build cars in the United States, but the components needed to manufacture them come from all parts of the world.

Manchin apparently doesn’t know how manufacturing works today, but that doesn’t stop him from shooting his mouth. As Mother Jones observed many years ago: “I once asked a man in prison how he was there and he told me he had stolen a pair of shoes. I told him if he stole a railroad, he would be a United States senator. In Manchin’s case, he did not rob a railroad, but he did use his position to create a market for a coal mine he and his family own.

When asked if automakers had submitted specific changes to Manchin, John Bozzella, head of the automotive trade group Alliance for Automotive Innovation, said Reuters“We have good conversations,” but declined to elaborate.

CATL Hits the Pause Button at the North American Factory

All the political turmoil surrounding Nancy Pelosi’s visit to Taiwan has consequences for the EV battery market. Everyone wants more American content in American-made electric vehicles, but should a Chinese company be part of the mix? CATL, the largest battery cell manufacturer on the planet, has explored the possibility of building a battery factory in North America. It has been investigating sites in Mexico and the United States and is reportedly ready to announce its intentions in the coming weeks.

But Bloomberg reports that the company plans to wait until September or October to make the announcement. He fears doing so now could stoke tensions at a sensitive time in US-China diplomatic relations. Its headquarters are in Fujian, just across from Taiwan. China has announced that military exercises will be held around the island this week in response to Pelosi’s visit to Taipei. He might also be worried about the Chinese government’s reaction to such an announcement at this time.

Takeaway meals

Politics is like making sausages. No one really wants to see how it’s done. Maybe some provisions of the IRA will be changed, but every change in one part can lead to calls for changes in other parts. Soon the whole package comes unstuck, which Republicans would like to see happen. The one thing we can be sure of is that lobbyists will make a lot of money before the dust settles and the smoke clears. That and a number of campaign funds will receive large cash injections by the time the final votes are counted.

Stay tuned. The finish line is in sight, but we’re not quite there yet.


 

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