China Sues US At WTO Over Inflation Reduction Act Subsidies

Though some Ford models have lost their eligibility for the federal clean energy tax credit as of late, that incentive is reportedly still paying dividends for Ford Pro commercial customers, specifically. However, in recent months, more than one Ford executive has expressed concerns over the possibility that cheap EVs from China may wind up being sold in the U.S., putting it at a serious competitive disadvantage. Those concerns have also been echoed by the Biden Administration, which is weighing higher tariffs or other restrictions to prevent that from happening, calling this potential invasion a “threat to national security.” Now, it seems as if China is responding in some way, as it has sued the U.S. at the World Trade Organization (WTO) regarding the aforementioned clean energy tax credit rules stemming from the Inflation Reduction Act (IRA), according to Bloomberg.

The Chinese Ministry of Commerce claims that IRA incentives are “discriminatory” and have “seriously distorted” the global supply chain, as those rules discourage the use of raw EV battery materials sourced from places like China, which have contentious relationships with the U.S. China also called for the U.S. to reverse this policy while filing its lawsuit against the country.

The point of contention here relates to the increasing critical mineral and battery component sourcing requirements contained within the IRA’s clean energy tax credits, with new requirements taking place at the beginning of 2024. It was at that point when several Blue Oval models – and vehicles from other brands – lost their eligibility for this credit due to the fact that they’re equipped with batteries that contain a higher percentage of materials from countries like China.

Following the implementation of these new battery sourcing rules that took effect on January 1^st, 2024, the Ford E-Transit, Ford Mustang Mach-E, and Lincoln Aviator Grand Touring are no longer eligible for the federal clean vehicle tax credit. Of course, FoMoCo isn’t alone in that regard, as its cross-town rival General Motors has seen the Cadillac Lyriq and Chevy Blazer EV lose their tax credits, along with the Tesla Cybertruck, Volkswagen ID.4, Tesla Model 3 Rear Wheel Drive, BMW X5 xDrive50e, Audi Q5 PHEV 55, and Nissan Leaf, meaning that just 19 vehicles now qualify for the credit compared to the original list of 43 models. The Ford F-150 Lightning is still eligible for the full $7,500 incentive, however.

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