European Union Thinks New EV Tax Credit Might Break WTO Rules

Kevin Williams
by Kevin Williams

The European Union isn’t a fan of the US’s new EV tax credit rules.

The US’s EV Tax Credit reform via the Inflation Reduction Act has had its criticisms from automakers, regulatory bodies, and EV buyers alike. Now, the European Union has thrown in its two cents, claiming the new tax credit rules are discriminatory and may breach WTO (World Trade Organization) rules.

For those out of the loop, the Inflation Reduction Act reforms the EV tax credit program in several ways. It removes the 200,000 unit cap, which means GM, Toyota, and Tesla EVs now would potentially qualify for credits again. But, it adds in new caveats, that only EVs made in North America, qualify. Then, on top of that, there are price caps, and material country-of-origin thresholds the vehicles must meet before they can qualify.

According to Reuters, the European Union is “deeply concerned.” Miriam Garcia Ferrer, a spokesperson of the European Union said “We think it’s discriminatory, that it is discriminating against foreign producers in relation to U.S. producers. Of course, this would mean that it would be incompatible with the WTO.” The EU insists that this bill favors mineral-rich countries, to the detriment of others, especially EU imports to the US.

As it stands, a lot of popular EV models would no longer qualify for tax credits. The Chevrolet Bolt EV and EUV would once again qualify, but nothing from Hyundai, Kia, Polestar, and many other brands, would be eligible for any tax credit. So far, the bill hasn’t been signed into law yet. It’s passed the Senate, but must go through the House of Representatives, and then be signed into law by the President. Until then, everything’s still up in the air.

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Kevin Williams
Kevin Williams

Kevin has been obsessed with cars ever since he could talk. He even learned to read partially by learning and reading the makes and models on the back of cars, only fueling his obsession. Today, he is an automotive journalist and member of the Automotive Press Association. He is well-versed in electrification, hybrid cars, and vehicle maintenance.

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