The new "green protectionism" regulations in the United States have hit China's battery companies hard
Friends, have you been concerned about a new regulation issued by the U.S. government recently? The new rules directly shut out China's major battery manufacturers and "hit a waterloo" in the U.S. electric vehicle market.
Key takeaways from the new rules: Starting in 2024, U.S.-made electric vehicles that contain any battery components manufactured or assembled by a "foreign entity of concern" such as China will not be eligible for a federal tax credit of up to $7,500. This means that some popular models such as Tesla models, Volkswagen ID.4, etc., will lose their eligibility for subsidies.
Affect a few happy and a few worried: This is undoubtedly a heavy blow, directly rejecting China's leading battery companies such as CATL and BYD. Their expansion in the U.S. market will be hampered and they may be at risk of being marginalized in the future. Some U.S. battery companies such as Panasonic and LG Energy Solutions will profit.
Consumers suffer: The new rules will not only affect battery companies, but will also hurt American consumers. It is said that if the Tesla Model Y does not receive subsidies, its price will increase by nearly 20%, which is "thankless" for consumers. The dreams of some middle-class families to buy an electric car may be put on hold.
The new U.S. "de-risking" rules disrupt the global industrial chain
Detailed explanation of the provisions of the new regulations: In addition to the restrictions on battery modules from 2024, the new regulations will further expand the scope of restrictions from 2025. Critical minerals used in electric vehicles, such as lithium, cobalt, nickel, etc., are also not eligible for tax credits if they are mined, processed, or recovered by "entities of concern" such as China.
This is undoubtedly a "slap in the face", directly cutting off China's participation in the upstream raw material supply chain. Even if the battery is produced in the United States, it will lose its subsidy eligibility as long as it uses minerals supplied from China.
Analysis of the motivation of the US side: The US has introduced this series of new "de-risking" regulations, which is obviously out of consideration for safeguarding national energy security. They hope to reduce their dependence on China's supply chain by developing a local electric vehicle industry chain to prevent being "stuck".
However, this practice undoubtedly has a strong "anti-globalization" flavor and violates the principles of market economy and the WTO's rules of fair competition. It not only harms the interests of Chinese companies, but also disrupts the normal operation of the global industrial chain.
Influence geometry? As soon as the new regulations are issued, the global industrial chain will undoubtedly be impacted. The outlook for Chinese companies in the U.S. market is worrying and may be further marginalized in the future. The development of the global electric vehicle industry will also be hampered, as China is the world's largest supplier of batteries and critical minerals.
The escalation of the new energy competition between China and the United States calls for the maintenance of a level playing field
In the face of the new "green protectionist" rules of the United States, China will naturally not sit idly by. The Ministry of Commerce has stated that it will take necessary measures to protect its own rights and interests and oppose the discriminatory practices of the United States.
China may retaliate: China may file a complaint on the WTO platform to challenge the new US rules for violating WTO principles. It is also likely to impose countermeasures on U.S. EV companies and restrict their access to the Chinese market.
A new energy game between China and the United States has begun. Neither side is willing to give in easily, and the future may fall into a protracted "war of attrition".
Intensifying confrontation between China and the United States: The competition between China and the United States in the field of new energy has been going on for many years. From imposing punitive tariffs on rare earths, photovoltaics and other products, to the U.S. detaining Chinese company personnel, to the latest "de-risking" rules, both sides are trying to weaken each other's competitiveness.
This kind of "you hurt me, I hurt you" approach will undoubtedly intensify the confrontation and decoupling between the two countries in the field of new energy, and hinder the process of global energy transition.
Calling for Fair Competition: We certainly understand the U.S. desire to defend its national interests, but this practice has seriously violated the principles of market economy and free trade. It is not conducive to the normal operation of the global industrial chain, and will also hurt the interests of American consumers.