US purchase incentives for electric vehicles hindering EU competitiveness

The EU and United States established a dedicated task force to discuss provisions in the US’s Inflation Reduction Act (US-IRA) that exclude EU-manufactured green goods from subsidies, including electric vehicles. The last ministerial meeting between the two Atlantic partners took place on 5 December.

The EU-US Trade and Technology Council did not result in tangible commitments from the US to remove discriminatory local content requirements in electric vehicle purchase incentives. The European Commission continued to remind the US that electric vehicles produced in there can benefit from European purchasing incentives, while the US does not reciprocate this. The Commission would like the EU to benefit from the same exemptions as Canada and Mexico. President Biden earlier indicated to President Macron that he was confident that a solution could be found, such as a temporary waiver allowing EU vehicles to qualify. Such a waiver would probably not survive in court, but it could provide a solution for a couple of years until a court strikes it down.


The US-IRA was signed into law in August. The bill introduces up to $7,500 in purchasing incentives for electric vehicles. The incentive will, however, not apply to most cars assembled in the EU or cars with an EU-manufactured battery.


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