How to make EVs without China’s supply chain

Two electrifying moves in recent weeks have the potential to ignite electric vehicle demand in the United States. First, Congress passed the Inflation Reduction Act, expanding federal tax rebates for EV purchases. Then California approved rules to ban the sale of new gasoline-powered cars by 2035.

The Inflation Reduction Act extends the Obama-era EV tax credit of up to US$7,500. But it includes some high hurdles. Its country-of-origin rules require that EVs – and an increasing percentage of their components and critical minerals – be sourced from the US or countries that have free-trade agreements with the US.

The law expressly forbids tax credits for vehicles with any components or critical minerals sourced from a “foreign entity of concern,” such as China or Russia.

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