The U.S. House of Representatives narrowly approved legislation on Thursday to impose stricter regulations on Chinese content in vehicles eligible for U.S. electric vehicle (EV) tax credits. The bill passed with a 217-192 vote but has yet to be addressed by the Senate.
The proposed law aims to tighten the definition of Chinese components that would make vehicles ineligible for U.S. EV tax credits. Automaker advocacy group, the Alliance for Automotive Innovation—representing companies such as General Motors, Toyota, Volkswagen, and Hyundai—expressed concerns that the bill could reduce the number of vehicles qualifying for tax incentives. The group’s CEO, John Bozzella, warned that if EV tax credits are reduced or eliminated, it could weaken the U.S. automotive industry and pose economic and national security risks from China.
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The bill, introduced by Representative Carol Miller, seeks to ensure that Chinese companies no longer benefit from EV tax credits intended for U.S. manufacturers. The new regulations would expand the scope of the “Foreign Entity of Concern” category to include China and other nations.
These changes follow the U.S. government’s efforts, initiated by the Inflation Reduction Act of 2022, to reduce dependency on China for the EV battery supply chain. In response to automakers’ concerns about strict battery mineral sourcing requirements, the U.S. Treasury recently allowed some flexibility on certain trace minerals like graphite. Automakers now have until 2027 to comply with the new standards for these hard-to-trace minerals.
Currently, only 22 out of 113 EV and plug-in hybrid models available in the U.S. qualify for the EV tax credit, with just 13 eligible for the full $7,500 credit, according to Bozzella. Neither the U.S. Treasury nor the Chinese Embassy in Washington has commented on the House vote.
Key Points:
- House Approves Bill: U.S. House of Representatives passes legislation to tighten rules on Chinese content in vehicles eligible for electric vehicle (EV) tax credits with a 217-192 vote.
- Impact on Automakers: The bill may reduce the number of vehicles qualifying for tax incentives, with automakers warning of economic and national security risks from China if credits are reduced.
- Stricter Definition of Chinese Components: The bill redefines Chinese components to limit eligibility for U.S. EV tax credits, targeting China and other “Foreign Entities of Concern.”
- Bill’s Sponsor: Representative Carol Miller aims to prevent Chinese companies from benefiting from U.S. EV tax credits designed for domestic manufacturers.
- Current EV Eligibility: Of the 113 EV and plug-in hybrid models in the U.S., only 22 qualify for the EV tax credit, with 13 eligible for the full $7,500 credit.
- Battery Mineral Flexibility: U.S. Treasury recently extended the deadline to 2027 for automakers to remove certain hard-to-trace minerals like graphite from China used in EV batteries.
