2023-12-15 19:07:00
French President Macron
The reason the world is paying attention to the US Inflation Reduction Act (IRA) is because this bill is shaking up the global supply chain order to protect the country’s downstream industries. This movement is spreading in the form of ‘national egoism’ not only in the United States but also in Europe and Japan.
On the 14th (local time), the French government released a ‘list of subsidy-receiving vehicles’ that applied the reform of the electric vehicle subsidy system, called the ‘French version of IRA’. Most of the 79 types receiving subsidies were European-made vehicles, and vehicles made outside of Europe were largely excluded. The only Korean car included was Hyundai, produced in the Czech Republic. Kia Niro and Soul, which had received subsidies until this year, were eliminated because they were produced in Korea and transported to France. There is an analysis that it has taken a direct hit because there is no exception such as the US IRA’s rule excluding leased cars.
It is highly likely that the preferential policy for European-made vehicles will be adopted in other European countries. In fact, Italy is also considering introducing a similar system, and Turkiye is raising barriers to entry for foreign companies by requiring electric vehicle companies to have more than 140 service centers and call centers.
Hyundai Kona Electric./Provided by Hyundai Motor Company
Moreover, the EU has also announced the introduction of the Critical Raw Materials Act (CRMA), which aims to increase the production rate of key raw materials in Europe. Last month, a tripartite negotiation between the EU Council, European Parliament, and EU Commission, the final hurdle for implementation, was concluded. CRMA regulates the processing and recycling of core minerals such as lithium, nickel, and aluminum at a certain rate within the EU, and aims to reduce the mineral import ratio to below 65% by 2030.
The Japanese government will also soon announce a ‘Japanese version of IRA’ that will expand tax benefits to five strategic businesses, including electric vehicles, batteries, semiconductors, renewable aviation fuel, and green steel. This is a policy that reduces corporate tax by up to 40% for 10 years for companies that produce and sell products related to the five industries in Japan. India is also increasing incentives for producers entering the country and is moving to weaponize resources such as nickel.
Experts point out that although the U.S. IRA and Europe’s CRMA started out as sanctions once morest the public, as domestic companies are also taking a hit, they need to start a new plan to prepare for the new supply chain order. It is necessary to prepare for not only establishing a local factory or securing stable minerals in Europe, but also recycling raw materials using waste battery technology and developing next-generation technology to replace lithium-ion batteries. An industry official said, “Korea has enjoyed success under the free trade policy, but change is inevitable as the supply chain is reorganized. As Chinese companies, our biggest rivals, have become targets of attack, the public and private sectors must work together to find clever ways to use the system.” did.
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