Ford, Toyota Are at Odds With Their Suppliers Over Electric Vehicle Tax Credit
As automakers call on the US government to rethink a plan to limit tax credits for electric vehicles, they're facing opposition from an unexpected source: their own suppliers.
Car giants such as Ford Motor Co. and Toyota Motor Corp. say the government should loosen the terms of the $430 billion Inflation Reduction Act to allow manufacturers to source EV components from more places. Under the recently passed legislation, consumer tax credits the auto industry says are critical to widespread adoption wouldn't be allowed for EVs whose batteries contain material from a so-called “foreign entity of concern” beginning in 2024.
The automakers' stance clashes with that of US mining companies supplying raw materials to the industry, who say the act is right to push manufacturers toward domestic producers.
The rift, which spilled out into the open as the US Internal Revenue Service solicited public input on the EV tax credit provisions in the new law, underscores the divergent agendas of companies across the supply chain on a hotly debated topic. EV adoption has surged in recent years in part because of consumer incentives that bring down sticker prices still running well above those of gas-fueled models.
In comments to the IRS released late Thursday, Ford urged the US to exempt domestic suppliers from the foreign entity restrictions, regardless of ownership, and to also allow most non-US companies as long as 50% or less of their ownership doesn't meet the foreign entity of concern definition.
“An overly expansive interpretation of this provision risks undermining” the law's objectives by making the vehicle credits “largely unavailable,” the company said. Ford said the industry needs flexibility so that unintended traces of
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