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The EU and the United States will coordinate their incentive programs for electric cars

The European Union and the United States want to coordinate their incentive programs for electric mobility. Ursula von der LeyenPresident of the European Commission, has met with Joe Biden to negotiate an agreement that, at least on paper, should reduce the pressure of the Inflation Reduction Act on the old continent.

Among other things, the European Union hopes that electric vehicles manufactured within its borders can benefit from United States tax creditswhich are currently restricted to models produced in North America, a move that has been applauded by Canadian and Mexican authorities.

Although this movement sought to protect US industry from China, has seriously hurt Europe as a side effect. And it is that many manufacturers (both batteries and automobiles) have already announced that they will focus their investments in North America with the aim of benefiting from the large state subsidies, something that puts European partners in a compromised situation.

The agreement also would secure supply chains for battery production in the European Unionas well as the access of the raw materials extracted in our region to the US market.

Joe Biden, President of the United States

The EU and the United States are closer to reaching a final agreement

“Today, the United States and the European Commission have announced the launch of the Clean Energy Incentives Dialogue to coordinate our respective incentive programs so that they are mutually reinforcing. We are working […] so that our incentives maximize clean energy deployment and jobs, and do not generate windfall profits for private interests.”

In parallel, the European Union also has adapted its rules on state aid to simplify the approval process of those subsidies destined to sectors such as batteries or renewables. With this movement, the European authorities seek to respond to the Inflation Reduction Act and protect local investments.

The amendment gives Member States greater leeway in allocating public funds, be it in the form of grants, loans or tax credits. In addition, in those cases in which there is a high risk of relocation, Aid offered by a non-European government may be compensated to keep the company in the European Union. This modification of the regulations is temporary and initially will only apply until the end of 2025.

Source | elective

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