US implements measures to limit China's influence in Electric Vehicle supply chain

The Biden administration has taken a significant step to reduce China's involvement in the United States' electric vehicle (EV) supply chain, issuing regulations that some critics fear might hinder the transition from traditional gasoline-powered cars.

Announced by the U.S. Treasury on Friday, the new rules stipulate that starting next month, American-made EVs incorporating Chinese-produced battery components won't qualify for the complete subsidies outlined in President Joe Biden's $369 billion climate legislation. Additionally, EVs won't be eligible for incentives under the Inflation Reduction Act if they're manufactured by firms closely associated with the Chinese government or if they're created via licensing agreements with China-based entities.

An attempt to ensure China doesn't have leverage on the US?

According to a report from the Financial Times, John Podesta, Biden's top clean energy adviser, underscored the guidance's role in securing an American-centric future for electric vehicles. "With this guidance and the clarity that it will provide, we’re ensuring that the U.S. electric vehicle future will be made in America," Podesta stated.

This directive arrives after Biden's recent meeting with Chinese President Xi Jinping, aiming to alleviate tensions between the world's two largest economies. Podesta emphasized, "China still dominates the supply chains for key technologies . . . they completely outpace the US and our allies on the production of batteries and their components."

China indeed holds a significant position in EV and battery production, processing over 50% of the world's vital lithium, cobalt, and graphite, crucial elements in this industry.

As the Biden administration aims to electrify the economy to curtail emissions while fostering job creation and competing with China, it faces a delicate balancing act ahead of the upcoming elections. The administration has set an ambitious target for EVs to account for 50% of all new vehicle sales by 2030.