These contradicting policies won’t work economically or help Biden politically, but they do point to the commonsense way forward. Namely, an end to Biden’s impossible EV mandates, an end to Biden’s costly EV subsidies, and an end to Biden’s many bans on domestic rare earth mineral production.
Biden’s scheme has two components. First, using the regulatory power of the Environmental Protection Agency, Biden has issued strict new mandates forcing all domestic automobile manufacturers to ensure that two-thirds of all cars sold by 2032 are electric. If any car company misses that metric, it will be hit with crippling, trillion-dollar fines from the EPA.
Many Democrats who signed on to these electric vehicle subsidies, however, did not want them to benefit foreign companies. So, the law authorizing these tax credits, the inaptly named Inflation Reduction Act, also required that a certain percentage of the components of each car must be produced domestically to qualify for the credit.
Manchin is right. By not enforcing the Inflation Reduction Act’s ban on tax credits for cars made with foreign components, Biden is effectively subsidizing Chinese companies. But here is the thing: Without those subsidies, domestic car companies will never be able to reach the strict EV mandates set by Biden’s EPA. If the Inflation Reduction Act were enforced as written, none of the existing EVs on the market would qualify.
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