By Philip Blenkinsop
STOCKHOLM (Reuters) – The European Union is trying to convince the United States to ease requirements that electric vehicles must be ‘Made in the USA’ to qualify for tax credits, even as the two sides near a deal on raw materials, a senior EU official said on Thursday.
Washington is providing tax credits of up to $7,500 for consumers buying electric vehicles, but only if final assembly and battery components amounting to at least half of the value are made in North America.
European Commission Vice President Valdis Dombrovskis, who oversees EU trade policy, said discussions were continuing on these local content requirements and that the EU wanted to establish how battery components were defined.
“Is it only specific battery components or everything? And indeed that was a subject of discussion with Treasury Secretary Yellen last Thursday. So there the work is ongoing,” he told a briefing in Stockholm before a ministerial meeting on trade.
The Treasury Department is due to set guidelines later this month.
“They need to respect the letter of the law, but still there’s room for manoeuvre,” Dombrovskis said.
A further criteria for the tax credit is that a large share of critical materials comes from a U.S. free trade agreement (FTA) partner, which the European Union is not.
The United States and the European Union are nevertheless working towards a deal to make European minerals eligible for tax credits, a senior EU official said on Friday. The EU would be considered as having “FTA-equivalent” status.
Dombrovskis confirmed this, with an announcement expected to be made on Friday when U.S. President Joe Biden and Commission President Ursula von der Leyen meet.
Dombrovskis said the European Union also wanted to create a critical raw materials “club” that would pool like-minded consuming and producing countries, as a counterbalance to China, which dominates processing of lithium and rare earths.
(Reporting by Philip Blenkinsop; editing by Barbara Lewis)
