The Biden Administration has recently proposed new rules that will affect the availability of consumer tax credits for electric vehicles (EVs). These rules are designed to incentivize the purchase of climate-friendly cars by providing an incentive to potential buyers. The new rules were added to the Democrats' Climate, Tax and Health Care bill and require that a part of the battery components must be manufactured or assembled in North America and a portion of the minerals in its battery must be refined or processed in countries with which the U.S. Has a free trade agreement. These rules were met with mixed reactions from those in the industry.
John Bozzella, president and CEO of the Alliance for Automotive Innovation, expressed concern over the battery minerals requirement, noting that this requirement will reduce the number of eligible EVs and customers who qualify for the full $7,500 credit. Sen. Joe Manchin (D - W. Va. ) has expressed disagreement with the new guidance, saying it would benefit only China and harm US manufacturers. He has called the rules “horrific” and urged Americans to comment during the 60-day comment period.
The Environmental Protection Agency (EPA) has recently approved California's authority to set its own regulations that require manufacturers to increase the sale of electric trucks in the state. California's rule requires different standards for different types of truck, with 55% of trucks in classes 2b through 3, 75% of trucks in classes 4 through 8 and 40% of truck tractors needing to be electric by 2035. The truck and engine manufacturers association has raised concerns about the timeline given to manufacturers to comply with the regulations, while Gov. Gavin Newsom's (D) office has welcomed the decision of the Biden administration, stating that it will protect millions from the air pollution caused by diesel trucks and help combat climate change.
The Biden administration's new rules are intended to create domestic manufacturing jobs and to provide security in the mineral supply chain, while also providing an incentive to those interested in purchasing an electric vehicle. However, the potential implications of the new rules are yet to be seen and it is likely that they will be met with continued criticism from those in the industry.