US climate bill puts focus on breaking Chinese supply chain for electric vehicles
- The legislation, which awaits Biden’s signature to become law, attempts to localise EV manufacturing, but the industry remains heavily reliant on China-linked components
- China, Vietnam and Russia hold 70 per cent of global reserves of rare earth minerals critical for energy transition, according to a recent report
While it includes provisions on taxes and healthcare, it is the most significant effort in US history to curb the effects of climate change, with US$360 billion allocated to drive a shift toward solar, wind and other renewable energy.
The legislation aims to electrify the biggest source of greenhouse emissions in the US: the transport sector. The Biden administration aspires for at least half of Americans to buy “made in America” electric vehicles rather than fossil fuel-powered rides by 2030.
To this end, the measure tries to localise manufacturing of electric vehicles with incentives directed at both carmakers and prospective buyers.
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US Senate passes bill that would be country’s single-largest investment in fighting climate change
Currently, 200,000 EV buyers from an individual manufacturer receive a tax credit of US$7,500. The new law will remove the 200,000 cap but adds a steep requirement aimed at weeding out “foreign entity of concern” from supply chains. However, the American EV industry is still heavily reliant on China-linked components.