Automakers wave caution flags on EV policies
The United States has a new policy calling for a rapid shift to electric vehicles made in North America with domestically-produced batteries and battery minerals. Everybody in? Not quite.
Hyundai Motor Co chief operating officer Jose Munoz, the head of Volkswagenās U.S. operations, Pablo Di Si, and BMW Chief Executive Oliver Zipse all on Wednesday urged Washington to rethink key parts of the new U.S. electric vehicle subsidy policy outlined in the Inflation Reduction Act.
The Inflation Reduction Actās domestic content and assembly requirements mean many consumers will not get a full $7,500 in federal tax credits if they bought a Hyundai, VW or BMW EV - or
EVs from many other brands that cannot meet the IRAās domestic assembly or content requirements for batteries.
A key concern for VW, Di Si told the Reuters Automotive USA conference, are requirements that by the end of 2026, 80% of the minerals used in batteries be sourced within the United States or allied countries. (
The White House underscored that goal Wednesday with $2.8 billion in grants for domestic battery and mineral production.)
Otherwise, vehicles cannot qualify for $3,750 in tax credits. Shifting long-term mineral supply contracts and production operations cannot happen that quickly, Di Si said. He proposed stretching out the battery domestic content ramp to 2030.
Munoz told the Reuters conference in Detroit that Washington should consider extending the tax credit to automakers that have committed to U.S. production - such as Hyundaiās new $5.5 billion EV and battery assembly
plant in Georgia where construction breaks ground next week.
Zipse, in
South Carolina Wednesday to announce a $1.7 billion investment to produce EVs at BMWās Spartanburg, S.C. complex, said no region can be fully independent when it comes to battery minerals. āIt would be a disaster if you stop industry from developing,ā Zipse said, adding the regulations in the United States could inhibit investments.
Separately,
Stellantis CEO Carlos Tavares used the podium of the Paris Auto Show to call for talks with European Union regulators to soften a proposed 2035 ban on combustion engine sales to leave more room for hybrids. āThe dogmatic decision that was taken to ban the sale of thermal vehicles in 2035 has social consequences that are not manageable,ā Tavares said.
Hereās one way to summarize these messages: Automakers are increasingly concerned that policy makers are moving too fast for an industry that needs years to recover big capital investments or shift complex supply chain operations from one region to another. The potential for
economic slumps in major markets amplifies the industryās anxiety.