European Union Negotiates US On Electric Vehicle Requirements Must Be Made In The USA

JAKARTA - The European Union asked the United States (US) to lighten the requirements for electric vehicles to Made in The USA. Especially in qualifying for tax credit and on raw materials.

Washington provides tax credit of up to $7,500 for consumers who buy electric vehicles, but only if the final assembly and battery components are at least half of the value made in North America.

European Commission Vice President Valdis Dombrovskis, who oversees EU trading policies, said discussions were continuing on the requirements of this local content and that the EU wanted to establish how the battery components were defined.

"Is it just a particular battery component or everything? And indeed it became the subject of discussion with Finance Minister Yellen last Thursday. So work is ongoing," he said at a briefing in Stockholm before a ministerial meeting on trade.

The Treasury Department will set guidelines later this month.

"They have to respect the law, but there is still room to maneuver," said Dombrovskis.

A further criterion for tax credit is that most of the essential ingredients come from US free trade agreement partners (FTA), while the European Union is not.

The United States and the European Union are still working towards an agreement to make European minerals eligible for tax credit, a senior EU official said on Friday. The European Union will be deemed to have a "equivalent FTA" status.

Dombrovskis confirmed this, with an announcement expected to take place on Friday when US President Joe Biden and Commission President Ursula von der Leyen meet.

Dombrovskis said the European Union also wants to create a "club" of critical raw materials that will unite similar-minded consumer countries and producers, as China's balancer, which dominates lithium and rare earth processing.