The United States and the European Commission have reportedly reached a preliminary agreement to allow electric vehicles containing critical minerals extracted or processed within the European Union to qualify for US green subsidies. The deal would cover key minerals such as lithium, manganese, nickel, and cobalt, which are essential for battery production. If finalized, the move could enable electric vehicles with EU-sourced minerals to qualify for subsidies under the US$430 billion Inflation Reduction Act package.
Under the current IRA rules, electric vehicles are only eligible for subsidies if at least 40% of their critical minerals come from the US or a country with which it has a free trade agreement. This new agreement between the US and the EU aims to revise these rules and allow for greater flexibility in sourcing critical minerals for the production of electric vehicles.
The proposed agreement comes after US President Joe Biden and European Commission President Ursula von der Leyen agreed to launch talks on a raw materials agreement earlier this month. The move could help to bolster the electric vehicle market by making it easier and more affordable for manufacturers to source critical minerals from a wider range of global suppliers.
The potential agreement could also serve as an example for other countries seeking to incentivize the production and use of electric vehicles while ensuring the sustainable sourcing of critical minerals. With demand for electric vehicles continuing to grow, finding new sources of critical minerals is becoming increasingly important. The US-EU agreement could be a significant step towards achieving this goal.
Overall, this potential agreement between the US and the EU has the potential to benefit both regions and promote the global transition to cleaner and more sustainable transportation. As negotiations continue, it will be interesting to see how the final agreement takes shape and what impact it will have on the electric vehicle market.
