USA to subsidise electric vehicle manufacturers

The US government wants to invest two billion US dollars from the Inflation Reduction Act to accelerate domestic production of electric and hybrid vehicles. Projects that help to preserve endangered jobs are to be prioritised.

As announced by the US Department of Energy, the Domestic Manufacturing Conversion Grants programme will provide grants for the production of efficient electric vehicles, specifically full hybrid, plug-in hybrid, battery electric and fuel cell vehicles. Preference will be given to projects that either rehabilitate or convert production facilities or plants that have recently ceased operations or are expected to cease operations in the near future, whereby the government aims to preserve existing jobs.

Further details on the programme have not yet been revealed. According to the Ministry of Energy, the announcement made by the US Department of Energy is a “Notice of Intent”. The funds are expected to be available “in the coming months”. Those interested in the funding can register with the Department to receive more information soon.

US President Joe Biden signed the Inflation Reduction Act in August 2022. Among other things, it reformed the tax credit for electric vehicles. The Act combines incentives for consumers and businesses to buy clean vehicles with programmes to expand the manufacturing and sourcing of vehicle components and key minerals in the United States.

The Inflation Reduction Act is considered a renamed version of the US President’s “Build Back Better” plan. Bilden’s entire climate protection package was once introduced in the committees at a cost of almost two trillion dollars. It was subsequently trimmed in the legislative process. In the version that was passed, it totalled 369 billion dollars. The law includes numerous climate protection expenditures such as the US production of solar modules and wind turbines (60 billion dollars), research in the field of cleantech (27 billion dollars) or the reduction of emissions in agriculture (20 billion dollars). But also a lot of impulses for low and zero-emission transport, whereby the subsidies are always linked to local value creation in the USA or with free trade partners, leading to tensions with the EU. In the meantime, both sides are paving the way for an agreement that does not disadvantage either region during the current ramp-up in manufacturing low- and zero-emission vehicles.

In the USA this ramp-up is proceeding at an eye-watering pace. Just last week, the US government loaned Ford‘s subsidiary with SK On, Blue Oval, $9.2 billion for three battery factories in the USA.


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