The US government wants to encourage local car manufacturers to make the transition to sustainable fuels, including electrification. In total, the US Department of Energy is making $12 billion in grants available to car manufacturers.
The money is intended to support car manufacturers with retrofitting their plants to produce sustainably powered vehicles. These include electric and hybrid vehicles, as well as hydrogen-powered cars.
Half of all new cars sold electric by 2030
With the help of the subsidy, the Americans want to start increasing the share of electric vehicles on US roads. If it were up to the US government, at least half of all new cars sold would be electric by 2030.
The money also aims to safeguard jobs in regions heavily dependent on the automotive sector. For instance, car manufacturers have to incur high costs due to the transition to sustainable fuels. With the help of subsidies, the US government wants to ensure that manufacturers retain staff, and the transition does not affect employment.
Electrification is relatively slow in US
The electrification of the US car fleet is going relatively slowly. In the first quarter of 2023, for instance, about 7% of vehicles sold had electric propulsion, figures from automotive service organisation Cox Automotive show. By comparison, in the Netherlands, 26% of all vehicles sold in 2022 were already fully electric, figures from RAI Association show.
In the European Union (EU), no similar subsidy for car manufacturers is comparable. However, subsidies for purchasing an EV are available. There are also plans for such a subsidy in the US; the US government announced subsidies for the purchase of EVs in August 2022 as part of the Climate and Energy Bill.
European concerns
The EU is concerned about these US plans and speaks of discriminating against foreign products, among other things. The subsidy is available in the form of a tax break of about $7,500. This benefit is available for cars that do not emit CO2 locally. Only cars whose materials used for the batteries come from the United States (US) are eligible.
This last provision in particular is a thorn in the EU's side. Miriam Garcia Ferrer, spokesperson for the European Commission, earlier spoke of discrimination against foreign products compared to US-made products. She also pointed to WTO trade rules, with which the US subsidy would not be in line.
'Subsidies must be fair and non-discriminatory'
The EU does not stress against US subsidies on EVs, but denounces the way the Americans want to provide them. This should be in a fair and non-discriminatory manner, the EU argues.
By: Wouter Hoeffnagel
Photo: Goran Horvat via Pixabay
