After some hefty lobbying by Canadian political and industry leaders, Electric vehicles made in Canada will qualify for hefty consumer tax credits in the United States after all.
This is a upshot of the news yesterday that Senator Joe Manchin, the conservative West Virginia Democrat who rejected U.S. President Joe Biden’s earlier drafts of the Inflation Reduction Ace 2022, but surprised colleagues late Wednesday with a new one.
Included in that act would be $369 billion over the decade in climate change-fighting strategies including tax rebates for consumers to buy new or used electric vehicles.
Most importantly for the Canadian auto industry, there are incentives for buying electric vehicles, including a $4,000 tax credit for the purchase of used electric vehicles and $7,500 for new EVs. Under a previous proposal, the tax credits would only apply to vehicles assembled in the United States.
According to the Canadian government, what had been on the books amounted to a 34-per-cent tariff on electric vehicles assembled in Canada and violated the terms of the United States-Mexico-Canada Agreement, or USMCA, the Canadian Press reported earlier this year.
Flavio Volpe, president of the Toronto-based Automotive Parts Manufacturers’ Association, applauded the deal.“Trade War averted on the crazy proposed U.S. EV tax credit that illegally excluded Canada-made vehicles,” he tweeted late Wednesday night. “New Democrat Senate package with Sen. Joe Manchin support now says credit applies to vehicles ‘manufactured in North America.’ A lot of us spent a lot of time on this.”
Promoting Ontario’s EV industry and EV battery production was a big part of the Ford Government’s economic campaign during the provincial election and he had led an Ontario delegation to Washington to lobby for the inclusion of Canada in the EV scheme.
The latest draft of the proposed bill adds provisions for battery materials and components.
Matthew Fortier, CEO of the Accelerate alliance made up of a range of automotive, mining and battery firms dedicated to building Canada’s EV supply chain, said the rule will benefit Canadian mines and battery plants. “Requiring EV batteries to contain materials from ‘free trade’ partners means more investment certainty for Canadian mineral and battery projects.”