Any significant reduction or rollback of support for electric vehicles under the inflation reduction law would benefit China, according to General engines Jon McNeill, board member.
“I think we’re at risk of losing auto manufacturing share to China. That’s really the case globally,” said McNeill, former You’re here president, co-founder and CEO of DVx Ventures, said Wednesday on CNBC’s “Squawk on the Street.”
The 2022 ERI includes incentives for consumers to purchase electric vehicles as well as significant support for automakers and suppliers to produce fully electric vehicles and their components in North America rather than at home. stranger.
McNeill, in an email to CNBC, said the IRA incentivizes both manufacturers and consumers to “level the playing field” against Chinese automakers.
The expansion of Chinese automakers is a growing concern for companies from Detroit to Germany. Global automakers are concerned that BYD and other Chinese competitors could flood their markets, reducing domestic production and vehicle prices.
The IRA is also a potential issue in the upcoming presidential election in November. Media outlets recently reported that if former President Donald Trump was elected to a second term, he would eliminate many of the Biden administration’s clean energy and climate initiatives, such as the $430 billion IRA .
Republican presidential candidate and former U.S. President Donald Trump attends a campaign event in Freeland, Michigan, U.S., May 1, 2024.
Brendan McDermid | Reuters
Trump has hinted at such moves. He told a May 1 rally in Wisconsin that once he takes office, he would “place an immediate moratorium on all new subsidies and spending giveaways under Joe Biden’s mammoth socialist bills, such as the so-called Inflation Reduction Act.”
“We’re going to save all this money. It doesn’t help you at all. It doesn’t do you any good. It’s just, it’s like a political game,” Trump said.
To achieve a full repeal of the IRA, Trump would need a Republican majority in both houses of Congress, which is unlikely, although possible. Furthermore, these hypothetical Republican majorities would have to put dismantling the IRA at the top of their list of legislative priorities, which is also not guaranteed.
However, in a second term, Trump could further delay implementation of IRA policies, which have already been implemented more slowly than some would like due to the complexity of the law.
McNeill said he was closely monitoring the political environment regarding the IRA. He said any changes should be a bipartisan discussion rather than some sort of Republican pushback or reduction.
McNeill noted that the Chinese government is supporting its domestic automakers in the form of billions of dollars in aid and subsidies, 0% financing and reduced labor costs, among other incentives.
Production is now set to begin at the former Detroit-Hamtramck Assembly Plant, less than two years after GM announced a massive $2.2 billion investment to completely renovate the facility to build a variety of trucks and fully electric SUVs.
Photo by Jeffrey Sauger for General Motors
“It’s becoming very difficult to be competitive at that price or cost level with the United States, which is why it’s really important, a lot of people think, to protect American manufacturers from that,” he said. -he declares.
To help U.S. automakers compete with Chinese companies, President Joe Biden last week announced plans to quadruple tariffs on electric vehicles made in China, raising them from 25% to 100%.
However, several auto and trade experts told CNBC that the tariff increase constitutes a short-term protectionist act that could delay, but will not prevent, Chinese automakers from coming to the United States. with electric vehicles.
Tariffs on electric vehicles and other increases on battery materials were part of a broader package of new duty rates on $18 billion in Chinese imports.
—CNBC Rebecca Picciotto contributed to this report.
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