When the U.S. Inflation Reduction Act was passed, there was uproar from foreign makers of electric vehicles because the law stipulated that only vehicles that were partially or wholly manufactured in the United States would qualify for the subsidies indicated in this new law.
The European Union is one trading bloc that has come out to protest what its calls “discriminatory policies” orchestrated by the U.S. against vehicles made from the European Union and elsewhere. The EU says that its member countries, such as Germany, have government subsidies in place to support the rapid adoption of electric vehicles. Those subsidies don’t discriminate EVs on the basis of where they were made, and because of that, Tesla’s Model Y took the number-one spot among most-purchased EVs in Germany in September.
If the German subsidy program had been discriminative, Tesla may not have registered such a dominant performance on the German electric vehicle market. This is according to Valdis Dombrovskis, vice president in charge of trade at the European Commission. He wants this difference in subsidy requirements to be revised so that EU electric vehicles are given equal treatment in the U.S. instead of being locked out of the subsidy program.
Volkswagen and other automakers from the EU are affected by the Inflation Reduction Act, in addition to carmakers from other parts of the world. Dombrovskis adds that other products related to the “green economy” were also affected by this new law passed in America. The VP was glad that the U.S. was willing to engage with its EU counterparts in order to arrive at a mutually beneficial solution to this concern.
The EU team hopes that the matter can be resolved before it escalates into a dispute between the United States and the European Union. Representatives from the two parties are having talks with the objective of exploring how the needed changes to the status of companies in the EU can be implemented.
While speaking to the press, U.S. trade representative Katherine Tai said that there is no reason to doubt that the concern about EV subsidies will be worked through by the two parties. You can bet that electric vehicle manufacturers such as Kandi Technologies Group Inc. (NASDAQ: KNDI) will be following these talks closely in order to see how the outcome will affect the EV market in the two key markets.
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