New US rules on Chinese batteries could push up price of electric cars | CNN Business
New US rules on Chinese batteries could push up price of electric cars CNN
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Sustainable Development Goals (SDGs) and New US Regulations on Chinese Batteries in Cars
Introduction
- The US government has announced new regulations that aim to keep Chinese batteries out of cars sold in the United States, a move that could push up the price of electric vehicles for American drivers.
Impact on Electric Vehicles and Subsidies
- The Biden administration has proposed rules that would cut subsidies for vehicles that contain Chinese-made battery components or are produced by companies with strong ties to the Chinese government.
- China is the world’s leader in EV battery production, dominating almost every stage of the EV battery supply chain.
- Starting next month, vehicles with these components will no longer be eligible for a full $7,500 US tax credit, which allows consumers to save money when buying a new electric car.
Regulations and Supply Chains
- The regulations prohibit the use of parts made or assembled by “foreign entities of concern” (FEOC), which refers to companies based in China, Russia, North Korea, or Iran, or with at least 25% voting interest, board membership, or ownership by a government of one of those countries.
- From 2025 onwards, eligible clean vehicles may not contain any critical minerals that were extracted, processed, or recycled by a FEOC.
- These regulations could reshape automakers’ supply chains, as China currently dominates global battery cell production and the processing of minerals needed for EV batteries.
Response from Stakeholders
- John Podesta, a senior advisor to the president on clean energy innovation, stated that these regulations align with President Biden’s goal of reversing the trend of letting jobs and factories go overseas to China.
- John Bozzella, the president of industry body Alliance for Automotive Innovation, welcomed the proposal for providing clarity to manufacturers but emphasized that the transition to EVs requires a complete transformation of the US industrial base.
- Tesla, a major player in the EV market, has warned that some of its vehicles may soon become more expensive due to these regulations.
Existing Efforts and Potential Challenges
- The new measures add to existing efforts by Washington to redirect auto manufacturing to the United States.
- Biden’s Inflation Reduction Act mandates that vehicles must be assembled in North America to be eligible for the $7,500 tax credit.
- Limiting the number of cars eligible for tax breaks may hinder Biden’s goal of boosting EV sales to account for 50% of all new vehicle sales by 2030.
Conclusion
- The new US regulations on Chinese batteries in cars aim to strengthen domestic supply chains and promote the production of EVs in America.
- While these regulations may increase the price of electric vehicles for American drivers, they align with the Sustainable Development Goals (SDGs) by promoting clean energy innovation and reducing reliance on foreign entities.
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