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U.S. automakers and a group of Senate Democrats are working to block provisions of the Reducing Inflation Act aimed at strengthening domestic supply chains for critical minerals, excluding China from U.S. taxpayer subsidies and putting the U.S. on the path to renewable energy independence .

Sen. Debbie Stabenow (D-MI) told reporters this week that rules requiring key components to be sourced from U.S. and allied trading partners should be changed to allow consumers to receive tax credits for cars that don’t meet the current version’s requirements. the bill.

The bill, a compromise between Sen. Joe Manchin (D-WV) and Majority Leader Chuck Schumer (D-NY), includes nearly $370 billion related to “climate change and energy security” invest. These include tax credits and other incentives to boost electric vehicles, renewable energy investments and investment in critical minerals.

Technicians install batteries on a new energy vehicle on a production line of Kyrgyzstan in Sanjiang New District, Yibin City, southwest China's Sichuan Province, July 20, 2022.  The 2022 World Electric Vehicle and Electric Vehicle Battery Conference kicked off here on Thursday, showcasing the latest EV & ES battery technologies and sustainable mobility.  (Photo by Wang Xi/Xinhua via Getty Images)

Technicians install batteries on new energy vehicles on a production line of Kyrgyzstan in Sanjiang New District, Yibin City, southwest China’s Sichuan Province, July 20, 2022. (Photo by Wang Xi/Xinhua News Agency: Getty Images)

One of the provisions is to expand the $7,500 tax credit to help consumers buy electric vehicles. The bill removes the existing 200,000-vehicle cap under existing law and creates a $4,000 credit for used electric vehicles.

The bill also substantially revises the criteria for vehicles to qualify for tax credits in a way that aligns with economic nationalism goals. Final assembly of the vehicle must take place in North America. Initially, 40% of the value of key minerals used in EV batteries must come from countries with free trade agreements with the United States, rising to 50% by 2024 and 80% by 2027. Vehicle requirements that meet critical mineral requirements will be eligible for a $3,750 tax credit.

The bill also allows an additional $3,750 in tax credits if at least 50% of the battery components are manufactured or assembled in North America. By 2029, this number will reach 100%.

Importantly, the bill would prohibit the application of the aforementioned tax credits if vehicle batteries contain “any” critical minerals sourced from China, Russia or any “entity of foreign concern.”

According to reports, the automaker protest They can’t meet the requirements, so their customers won’t be able to take advantage of the tax credit. While tax credits directly benefit car buyers, they benefit manufacturers by subsidizing sales. Senator Manchin was hesitant to protest their protest.

from Reuters:

“Tell (automakers) to be proactive and make sure we mine in North America, we process in North America, and we set up a line in China,” Manchin told reporters. “I don’t think we should have a shipping model behind foreign supply chains. I’m not going to do that.”

The U.S. makes its own gasoline-powered cars and engines, Manchin said. “Now suddenly — now we can’t?” asked the senator from West Virginia. “bring it on.”

Currently, most of the world’s refining of key minerals for batteries is done in China. This makes EV production dependent on Chinese manufacturers, similar to how Germany relies on Russian gas, giving China leverage over the U.S. through its control of battery materials. On top of that, critical mineral refining capacity will be more difficult to replace than Russian gas, requiring more time and more capital investment.

Stabeno has claim U.S. automakers are “working very, very hard” so that supply chains don’t have to go through China, but think it will take years, according to roll callAt the same time, she wants to ease restrictions. The result would be U.S. tax credits that enrich Chinese refineries and hinder the diversification of the world’s refining capacity.



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