BMW Electric Vehicle Tax Credits and IRA Prohibits Sales of American-Made Electric Vehicles for American Buyers, and Implications for the American Economy

BMW just invested over a billion dollars in its factory in South Carolina to make electric cars and SUVs. $700 million was included for the construction of a battery manufacturing plant.

The rules allow tax credits only for electric vehicles that meet US manufacturing goals and batteries. They also require US sourcing for battery raw materials and they place caps on the cost of the vehicles and the income of the buyers. Buyers can get full tax credits only if they, and the vehicles, meet the requirements.

“You will not fly hundred of kilograms of batteries around the world or put them on a ship,” he said. You aren’t going to do it. You will keep using the word localize anyway.

The IRA was pushing American manufacturing unnecessarily, and they also risked negatively impacting America’s jobs, according to Zipse.

The IRA provides no benefit for vehicles, regardless of how “American made” they are, if they aren’t sold inside the US. Zipse said that protectionist regulations attempting to wall off American-made vehicles for American buyers can spark retaliation and endanger valuable export business.

Source: https://www.cnn.com/2022/10/20/business/bmw-chairman-ev-regulations/index.html

The Future of the Electric Vehicle Industry: How regulators will respond to the needs of the U.S. economy and the challenges of competing automakers

He said that a regulation cannot be made without looking at the consequences from other regulators. I warn that we will get a regulation.

“The assumption that you can incentivize an industry which is completely from A to Z inside one region in the world, in such a complex industry, like the car industry is a wrong assumption,” he said.

Zipse also warned of the possible unintended consequences of regulations, like those in some US states and in Europe, that ban sales of non-zero-emission vehicles after a certain date. It could mean that industry sales will decline.

Zipse said so many people could decide to keep their gasoline cars or buy a used gas-powered vehicle, because they won’t be able to have electric vehicle charging stations at home.

In just a few years electric vehicles will make up a big part of the new vehicle market in the United States. That means companies will need a tremendous number of batteries.

Regulators should impose more stringent emissions restrictions while leaving it to the auto companies to figure out how best to reach those targets, as regulators have done before, he said. Increasing global warming has not been halted by that approach.

“We can easily ramp them up,” Zipse said of increasing regulatory demand for electric vehicles. “All our factories are qualified for building EVs. We have a variety of approaches.

One of the world’s largest automakers is saying that it needs to close a plant indefinitely because it costs so much to produce an electric vehicle. That’s a bold claim, especially since it’s coming from a company I’d consider to be in distant third in the big three American automakers’ race to move their lineups from gas to batteries. It also doesn’t help that Stellantis has been promising quite a few electrified Jeeps, and it’s hard to see why this factory couldn’t play a role in making those vehicles, at least one of which is due out next year (and many of which have been very difficult to find).

It’s too early to say whether EVs are going to become a common scapegoat if the auto industry keeps carrying out layoffs, but now we have at least two companies trying to paint thousands of peoples’ livelihoods as the cost of the future. Rivian has had its own massive round of layoffs this year, so it doesn’t have that luxury.

In the first half of 2022, 13 percent of worldwide passenger vehicle sales were battery electric, plug-in hybrids, or fuel cell vehicles, according to data from BloombergNEF. The UK and China are leading the growth, with China leading the way with 22%. Zero-emission vehicles made up 7 percent of passenger vehicles sold in the US in the first half of the year.

Electric vehicle charging isn’t nearly widespread enough. Governments and private sector need to build out a global network of electric vehicle charging points that can serve both passenger cars and fleets of vans and trucks that can rival the convenience of gas filling stations. For another, the world’s supply of battery minerals—lithium, nickel, cobalt, even graphite—is limited, and it’s dirty work to get them out of the ground. Is it the electric tipping point? It’s a question that can only be answered in hindsight.

These days, billion-dollar plants to make the massive batteries that power electric vehicles are announced so often that — even if you follow the auto industry — it’s hard to keep track of them all.

Did you hear about the one from KORE Power in Arizona? Is it possible that there are two companies in Indiana? A Norwegian project is in Michigan, a Japanese one is in Georgia and a Chinese one is in South Carolina.

Or, if you aren’t impressed by a billion dollars any more, how about the $5 billion electric vehicle and battery project in Georgia? No, not that one — the other one.

Political pressure is building on companies involved with battery production to reduce reliance on China and create American jobs. The majority of global production of some key components for batteries is located in China.

Volkswagen of America’s president spoke to NPR in January of last year about moving production to the United States. “For us, it’ll be a dramatic and dramatic help to have enough production slots, to have the supply chain local, and to have the car here.”

The company opened a new electric assembly line in Chattanooga last year, with batteries supplied from a new SKI plant located a few hours away in Georgia, and cost nearly $1 billion.

Many of the new U.S. projects are going up in the Southeast, earning the region the nickname the “battery belt.” Tom Taylor of Atlas said the trend is wider than that.

He says they’ve seen announcements all over the country. Some states are home to some of the largest economic development projects in the state’s history.

The Slow Down of the GM Battery Plant: “It’s taken a long time to build it,” Barra told Good Jobs First

And while GM has successfully opened a new battery plant in Ohio, CEO Mary Barra had to defend the slow pace of production there on a recent call with investors.

She explained that the Ohio plant is large enough to employ over 1,000 people. “It’s taken a bit longer than we anticipated to have all our people there and trained.”

And that’s particularly concerning to some critics, because not all of those billions of dollars are coming from companies — a big chunk of it is footed by taxpayers.

Nearly $14 billion in state and local subsidies went to electric vehicle plants and battery factories this year, according to the subsidy watchdog group Good Jobs First, which has criticized both the size of the subsidies and the lack of transparency around them.

Theclimate bill passed this summer included heavy incentives for electric vehicle manufacturing in the U.S.