The aid provided by the US Inflation Reduction Act would be a threat to European battery gigafactory projects.
IRA, three letters that make people cringe in Europe. This is the Inflation Reduction Act, a 370 billion dollar plan initiated by Joe Biden, which should boost green industry in the United States. The measures are very protectionist, hence the annoyance in Europe.
Example with one of the major elements of the IRA, a tax credit granted to buyers of an electric vehicle, but with conditions: the car and the battery must be assembled locally. This therefore disadvantages vehicles produced on our side of the Atlantic. And proof that European politicians are right to worry: manufacturers have already reacted by reviewing their plans to build new factories.
As far as batteries are concerned, the NGO Transport & Environment comes out with an alarming figure: according to a study it carried out, “just over two-thirds (68%) of the production of lithium-ion batteries planned in Europe in 2030 may be delayed, reduced or cancelled” because of the IRA!
T&E has thus studied the case of 50 gigafactories planned in Europe based on public information, taking into account several criteria: progress, financing, securing the location and links of the companies with the United States. According to the NGO, “a battery production capacity equivalent to 18 million electric cars, or 1.2 TWh, presents a medium to high risk of being interrupted or lost”.
Tesla: why the Gigafactory in Berlin still produces few batteries
Germany could pay the heaviest price. Of the total expected production, the threat would be low for only 96 GWh. It would be average for 301 GWh and high for 87 GWh. An example has already shown that it is not wind: Tesla is already reviewing its intentions for the production of 4680 batteries at its Berlin site, admitting its intention to favor the United States for this. European factory projects are on hold due to competition with an equivalent site located in the land of Uncle Sam. France, on the other hand, would be little affected, while several gigafactories are under construction, particularly the North.
T&E therefore warns that Europe could still be, at the end of the decade, dependent on Asia, as is already the case now, but also on the United States for the batteries of electric cars. For Diane Strauss, director of T&E France, “ Europe must act so as not to lose everything. In response to US subsidies and China’s battery lead, there is an urgent need for a battery-focused green industrial policy, with EU-wide support to increase production. »
On March 14, Europe must announce measures which must respond, at least in part, to the IRA. T&E is calling for “tax breaks and subsidies to expand battery manufacturing while fully complying with Europe’s environmental standards.”