New trade fight between Europe and US over electric cars

Are we going to see a return to a trade war between Europe and the US? Another file, now pacified, poisons relations between Washington and Brussels, after disputes over subsidies to aircraft manufacturers Airbus and Boeing or tariffs applied to European steel and aluminum. Creation of a tax credit of up to $7,500 (€7,520) for the purchase of electric vehicles (including battery) manufactured in the United States, Canada and Mexico. The measure was passed by Congress on August 11 as part of Joe Biden’s deflationary legislation.

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In Brussels, as the midterm elections approach, if we understand the inner political underpinnings of such a decision, the UAW, a powerful union of automobiles established in some states in the Midwest, strongly supports the US Democratic president. This decision is no less discriminatory to Europeans. And from the old continent, most member states have set subsidies and other bonuses for the purchase of “Vatour” (electric vehicles) regardless of their place of manufacture.

For many European actors, acting is urgent. As of August 17, the European Automobile Manufacturers Association reported its strength “disappointment” After the announcement of the US action. “Subsidies are very important to start a market and adopt electric vehiclesReminiscent of the European lobby. To reach the target of 50% of zero-emission car sales by 2030, more inclusive support measures are needed. »

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A very lucrative market for Europeans

With a still modest share of electric outlets (5.6% in the second quarter of 2022, i.e. 432,000 models sold), the US has historically been the most profitable market for European brands, especially Germany. If Volkswagen has lost its luster since “Dieselgate”, Audi, BMW, Mercedes or Porsche are still catching up with Tesla and selling almost a million sedans there every year. In short, these groups want to profit from their huge investments in their new electrified models.

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In Washington, the Alliance for Automotive Innovation, a lobby that brings together American and European manufacturers, also recalled “Of the 72 electrified models offered in the country today, 70% do not qualify. If it is necessary to take into account the place of supply of basic materials of batteries, no one can claim full tax credit. [terres rares, lithium, etc.] », John Bocella, president of the coalition, writes on his blog.

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