EU hits US for Inflation Reduction Act electric vehicle tax credit requiring final assembly in North America

South Korean officials have also raised the alarm about the electric vehicle tax credits included in the Inflation Reduction Act

The sweeping Inflation Reduction Act signed into law by President Biden last month includes a $7,500 tax credit for new electric vehicle purchases, but only if the final assembly is completed in North America and at least 40% of the metals are mined on the continent. 

Those provisions could discriminate against European manufacturers who are ramping up electric vehicle production, EU Trade Chief Valdis Dombrovskis told US Trade Representative Katherine Tai in a virtual call on Thursday. 

"While the EU aims to cooperate closely with the US in climate action, green measures should not be designed in a discriminatory, WTO-incompatible way," the European Commission said. 

electric car charging

Tesla cars charge at a Supercharger station on Culver Ave. in Irvine, CA on Friday, January 28, 2022.  (Paul Bersebach/MediaNews Group/Orange County Register via Getty Images / Getty Images)

Under current law, buyers qualify for a maximum $7,500 tax credit until automakers build 200,000 electric vehicles. 


The climate bill passed last month removes that cap next year, but will implement a host of other requirements, including income limits for the buyer and price limits for the vehicle, in addition to the assembly specifications. 

The Department of Energy recently unveiled a list of about 30 models that will qualify, but dozens of electric vehicles made by German and other European manufacturers aren't included. 

Ford F-150 Lightning

Ford F-150 Lightning pickup trucks are shown at the Ford Rouge Electric Vehicle Center in Dearborn, Michigan.  (Bill Pugliano/Getty Images / Getty Images)

South Korea has also expressed concern about the tax credits. 


Kim Sung-han, South Korea's national security adviser, met with his American counterpart, Jake Sullivan, in Hawaii on Thursday and raised the issue. 

"(Sullivan) said (the U.S.) will take a detailed look at how the EV subsidy issue will pan out going forward, and what impact it will have," Kim told reporters after the meeting, according to the Yonhap news agency. 

The Associated Press contributed to this report.