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It is putting into question the transatlantic model businesses have built with investments that support trade on both sides of the Atlantic,' she said. 'The IRA threatens to disrupt existing supply chains, which have a lot of synergies. The EU auto industry and policymakers will be keen to see whether the terms 'final assembly' and 'battery components', are defined broadly or in a narrow way.įor example, EU trade officials are wondering whether the local content requirement for battery components means just specific components or all components and how comprehensive final assembly must be.īusinessEurope confederation deputy director general and trade expert Luisa Santos said it was important to see if any of the IRA's discriminatory elements had been addressed, to confirm leased vehicles would be exempt from local content requirements and to see if there would be any transition periods. The car industry supports more than 12 million direct and indirect EU jobs, according to EU automakers group ACEA. The trade in car parts in particular is often intra-firm or related party trade, reflecting integrated transatlantic supply chains.

The EU also exported about 9 billion euros of car parts to the United States, compared with 2 billion euros of imports.

The European Union exported some 36 billion euros ($39 billion) of cars to the United States in 2022, according to Eurostat, some 65% from Germany, with less than 9 billion euros worth of cars coming the other way. These shares rise by 10 percentage points per year.

#COMPONENT VALUES SOLVE ELEC FREE#

Half of the credit depends on 50% of the value of battery components being produced in North America, the other half if 40% of the value critical minerals are from the United States or a country with which it has a free trade agreement. consumers buying electric vehicles qualify for a tax credit of $7,500 as long as final assembly is in North America. Under the Inflation Reduction Act (IRA), U.S. The Treasury is not expected to specify vehicle models but merely lay out the subsidy criteria. Treasury Department is expected to give guidance on Friday on tax breaks for consumers buying electric vehicles and Europe's auto sector and policymakers will be closely watching to assess the consequences for European industry.

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