If approved by the initiative presented by the administration of President Joe Biden that includes tax credits for electric vehicles, it would undermine the alliance and the competitiveness of North America, the governments of Mexico and Canada have warned.
In fact, competitiveness is already being lost in the region, considering its share in the total number of motor vehicles produced worldwide, according to data from the International Organization of Vehicle Manufacturers (OICA).
In the first half of each year, North America’s share of that ratio fell from 19% in 2019, to 17% in 2020, and then climbed to 17.4 percent. The sequence for China was 26.4, 32.4, and 31.2%, respectively.
“Measures negatively impacting Canadian vehicle assembly will hurt America’s auto parts industry and jobs, given that each Canadian-produced vehicle assembled contains approximately 50% US content,” said Mary Ng, Small Business Minister, Promotion of the Exports and International Trade of Canada, in a letter sent to the United States Congress.
The initiative would increase credits for electric vehicles to $ 12,500 per vehicle, including $ 4,500 for vehicles made by syndicated plants and $ 500 for batteries made in the United States. The vehicles would have to be assembled in the United States beginning in 2027 to qualify for any credit.
“A weaker Canadian auto sector would also have negative implications for US auto producers and workers, particularly in the Great Lakes region, who rely on parts and materials from Canada that support production in both countries,” added Ng. .
In another letter addressed to the US Congress, Tatiana Clouthier, Mexico’s Secretary of Economy, asked that the provisions consider including incentives for all North American regional content and ensemble in a manner consistent with the Agreement between Mexico, the United States, and Canada (T-MEC). .
“We are encouraged by the recent actions that the United States has taken to rebuild alliances and strengthen our business relationship. However, the existence of new national content requirements in legislative initiatives in the US Congress would undermine the positive development of a strengthened North American alliance that could be a model for other democracies around the world, ”he added.
According to Reuters, tax credits for electric vehicles would cost 15.6 billion dollars over 10 years and would disproportionately benefit Detroit’s big three automakers: General Motors, Ford Motor and Stellantis NV, Chrysler’s parent company.
With the changes, if approved, a new tax credit would be granted to electric motor vehicles, which is defined as those sold after 2026 for which “final assembly was made in the United States.”
Higher tax incentives would also be given when a vehicle “meets local content conditions”, where a US content of at least 50% is considered with the integration of “US made batteries”.
Spanning just the first half of each year, global motor vehicle production was 46 million units in 2019, declined to 31.2 million the following year, and recovered to 40.3 million in 2021.
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