The European Union said on Thursday it was “deeply concerned” about proposed tax breaks for the purchase of electric vehicles (EVs) in the United States because they would discriminate against foreign producers and could breach World Trade Organization (WTO) rules.
Under a provision of the $430 billion climate and energy bill passed by the Senate on Sunday, US buyers of zero-emission electric vehicles could qualify for tax credits of several thousand dollars.
However, local content conditions would be applied to tax breaks to wean the electric vehicle industry away from reliance on China and stimulate local investment in minerals and battery manufacturing.
“We believe that it is discriminatory, that it is discriminating against foreign producers in relation to American ones,” said European Commission spokeswoman Miriam García Ferrer. “Of course, this would mean that it would be WTO-inconsistent.”
García Ferrer told a press conference that the EU agreed with Washington that tax credits are an important incentive to boost demand for electric vehicles and promote the transition to sustainable transport and the reduction of greenhouse gas emissions. .
“But we have to make sure that the measures introduced are fair and … non-discriminatory,” she said. “So we continue to urge the United States to remove these discriminatory elements from the bill and ensure that it is fully WTO compliant.”
A group of major automakers said last week that most electric vehicle models would not be eligible for tax breaks because of the requirement that vehicle batteries and their critical mineral content come from the United States.