The United States supports fleet electrification by providing subsidies to auto manufacturers

The US government wants to encourage domestic automakers to switch to sustainable fuels, including electricity. In total, the US Department of Energy makes $12 billion in subsidies available to automakers.

These funds aim to support automakers in adapting their factories to produce cars with sustainable driving. This includes electric and hybrid cars, but also hydrogen-powered cars.

Half of new cars sold will be electric by 2030

With the help of subsidies, Americans want to increase the share of electric cars on American roads. If the US government can achieve its goal, at least half of new cars sold will be electric by 2030.

These funds are also intended to ensure employment in areas that rely heavily on the automobile sector. For example, car manufacturers have to bear high costs due to switching to sustainable fuels. With the help of subsidies, the US government wants to ensure that manufacturers retain employees and that the shift does not affect employment.

The electrification process is moving relatively slowly in the United States

Electrification of the US vehicle fleet is relatively slow. For example, in the first quarter of 2023, nearly 7% of vehicles sold were equipped with an electric motor, according to figures from auto service organization Cox Automotive. For comparison: In the Netherlands, 26% of all vehicles sold will be fully electric by 2022, according to RAI figures.

There is no similar support for car manufacturers in the European Union. Subsidies are available for purchasing an electric car. There are also plans for such support in the United States; The US government announced support for electric vehicle purchases in August 2022 as part of the Climate and Energy Bill.

European concerns

The European Union is concerned about these American plans and speaks, among other things, of discrimination against foreign products. Support is available in the form of a tax credit of approximately $7,500. This feature is available for cars that do not emit any carbon dioxide locally. Only vehicles whose battery materials come from the United States (US) are eligible.

This last clause in particular constitutes a thorn in the side of the European Union. Miriam Garcia Ferrer, spokeswoman for the European Commission, previously spoke about discrimination against foreign products compared to American products. It also points to World Trade Organization trade rules, which US support would not be compatible with.

“Support must be fair and non-discriminatory.”

The European Union does not stress its opposition to American subsidies for electric cars, but it criticizes the way the Americans want to provide these subsidies. The EU says this must be done in a fair and non-discriminatory manner.

By: Wouter Hufnagel
Image: Goran Horvat via Pixabay