U.S. hits the EV accelerator to cut Chinese metals ties LONDON, Aug 16 (Reuters) - The Inflation Reduction Act (IRA) includes the "largest investment ever in combating the existential crisis of climate change", according to President Joe Biden, who will sign the bill into law later on Tuesday.
Around $369 billion of federal funds will flow into climate change and energy security, boosting domestic capacity to produce wind turbines, solar panels and electric vehicles.
However, the green investment comes with a metallic sting in the tail.
The IRA extends and expands the existing electric vehicle (EV) subsidy of up to $7,500 but conditions the tax credit on the sourcing of the mineral content of the battery.
At least 40% of the critical metals in the battery - lithium, nickel, cobalt and manganese - must come from the United States or a Free Trade Agreement (FTA) partner. That percentage rises to 80% in 2026.
Auto-makers lobbied hard against the linkage, arguing that China is still too dominant and the United States too lagging in the battery metals supply chain for it to work.
That, though, is the point. The link between subsidy and mineral input is meant to accelerate the drive to build out domestic, or at least friendly, critical minerals capacity and break China's stranglehold.
https://www.reuters.com/markets/commodities/us-hits-ev-accelerator-cut-chinese-metals-ties-2022-08-16/