By David Shepardson
WASHINGTON (Reuters) – The U.S. House of Representatives narrowly approved legislation on Thursday to tighten rules limiting Chinese content in vehicles eligible for U.S. electric vehicle tax credits.
The House voted 217-192 to approve the bill, which has not been taken up in the Senate, to tighten the definition of Chinese components that make vehicles ineligible for electric vehicle tax credits in the United States.
Alliance for Automotive Innovation, representing General Motors (NYSE: ), Toyota The New York Auto Exchange (NYSE:), Volkswagen (ETR:), Hyundai (OTC:) and other automakers said the bill would result in fewer vehicles qualifying and would mean rolling back stricter vehicle emissions rules and electric vehicle targets.
The auto industry group’s CEO, John Bozzella, said the criteria were based in part on the availability of electric vehicle tax credits, and if the incentives were removed, “the auto industry faces serious economic and national security risks from China, the United States becomes less competitive, and the rug is pulled out from under consumers.”
The bill, introduced by Rep. Carol Miller, aims to tighten the definition of a so-called “foreign entity of concern” that applies to China and other countries. She said this would “ensure that Chinese companies cannot take advantage of electric vehicle tax breaks reserved for American manufacturers.”
The rules required by the August 2022 law aim to move the U.S. electric vehicle battery supply chain away from China.
The US Treasury and the Chinese embassy in Washington did not immediately comment.
Bozzella said 22 of the 113 electric or plug-in hybrid models on sale in the United States currently qualify for the electric vehicle tax credit — and only 13 models get the full $7,500 credit.
In May, the U.S. Treasury gave automakers additional flexibility on battery metal requirements to get electric vehicle tax credits on some critical trace minerals from China, such as graphite.
The ministry said it would give automakers until 2027 to remove some hard-to-trace metals such as graphite in anode materials and critical metals in electrolyte salts, binders and additives.
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