Often singled out for his protectionism pushed to the extreme, Donald Trump must have appreciated the favor granted to American manufacturers on the occasion of the ratification of the “Inflation Reduction Act” by his successor, Joe Biden.
The modification of the conditions of allocation of the tax credit of $7,500 for the purchase of an electric vehicle thus provides that to be subsidized, the vehicle must be produced on American soil. A condition that favors local manufacturers, and which will force foreign brands to invest in production lines in the United States if they do not want to be deprived of an important part of the cake.
While the tax credit was previously reserved for only the first 200,000 vehicles from the same manufacturer, the new conditions remove this ceiling and extend the duration of the boost granted to customers by ten years.
A breath of fresh air for General Motors, Ford and Tesla who were already approaching this limit.
The counterpart of this modification concerns, on the other hand, the category of electric vehicles concerned, since it is now limited to $55,000 for a sedan and $80,000 for a pick-up or an SUV, but also potential customers, with a ceiling income set at $150,000 ($300,000 for a couple). Threshold beyond which the buyer is no longer eligible for the bonus.
Considered discriminatory for foreign manufacturers by the European Union, these measures will certainly force them to relocate part of their production to the United States so as not to deprive their customers of the bonus and to direct them towards eligible manufacturers and vehicles.
If Volkswagen has already announced that its ID4 electric SUV will be produced locally from 2023, other manufacturers should soon follow the same path. A trend that should be long term.