Inflation Reduction Act: EU criticizes US’s electric vehicle tax credit

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An electric vehicle charges at a charging station at the Capitol in Salt Lake City on Tuesday, March 29, 2022. The European Union says a new U.S. tax credit plan aimed at encouraging Americans to buy electric vehicles could discriminate against European producers and break world trade rules.

Spenser Heaps, Deseret News

The European Union criticized the U.S.’s proposed electric vehicle tax credit written into the Inflation Reduction Act on Thursday saying the proposed qualifications are “discriminatory” and may break World Trade Organization rules.

Most electric vehicles won’t qualify for the tax credit included in the act due to requirements limiting the use of materials sourced overseas and requiring the vehicle to be manufactured in North America.

“We think it’s discriminatory, that it is discriminating against foreign producers in relation to U.S. producers,” said European Commission spokesperson Miriam Garcia Ferrer, reported Reuters. “Of course this would mean that it would be incompatible with the WTO.”

Garcia Ferrer said the EU agrees with the United States’ efforts to provide incentives for electric vehicles but asked for the “discriminatory elements” to be removed from the bill.

The Inflation Reduction Act passed the Senate on Sunday with provisions to provide an up to $7,500 tax credit to electric vehicle buyers.

But most electric vehicles won’t qualify for the credit with the Alliance of Automotive Innovation estimating about 50 out of the 72 hybrid or plug-in models won’t meet the requirements.

The EU also criticized similar electric vehicle tax credits proposed in the Build Back Better bill in 2021 which it said would discriminate against European car manufacturers.

The U.S. House will likely gather for a vote on the Inflation Reduction Act on Friday, according to Reuters, where it is expected to pass.

Carlene Coombs

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