The Eu Has Responded To The US’s , Which Poached European Manufacturing

Last August, the US introduced the , a raft of measures including hefty subsidies to promote the production and deployment of electric cars and other green technologies in the US. After the act was introduced, many European companies shifted their investment plans to the US and European manufacturing suffered.

 

The Swedish battery maker plans to open a plant in the United States

 

In a Swedish Skellefteå town about 200km from the Arctic Circle sits a battery developer. The company, founded in 2016, was the first European company to supply power cells to carmakers, and its customers include well-known carmakers such as Volkswagen and BMW.

In March last year, the company announced plans to build a battery plant in Germany, which is expected to start production in 2025 and will create 3,000 jobs. Last October, however, Peter Carlsson, the company’s chief executive, said because of high European energy prices, the company would likely prioritise investment in the US, while plans for a German plant could be delayed.

In a recent media interview, Carlsson said bluntly that he was considering investing in the US because of subsidies in last year’s . Peter Carlsson, CEO of Swedish battery manufacturer said “while we’re building our plant in Germany, we’re also building it in North United States. Because of in the United States, there are indeed a lot of incentives.

 

The US has sparked concern and discontent in Europe

 

Indeed, in the wake of in the US, many European companies are rethinking their future investment plans. More than two-thirds of European lithium-ion battery projects are at risk of being delayed, cut or cancelled, the organisation warned this month.

Before that, big companies such as Volkswagen, Enel, Solvi, the Belgian chemicals group, and Iverdrola, the Spanish energy company, have shown interest in investing in the US. VW has shelved plans to build a battery plant in Eastern Europe, prioritising the US, the Financial Times said yesterday, citing people familiar with the matter.

The use of US subsidies to poach European manufacturing has sparked concern and resentment within Europe that the US Inflation Reduction Act discriminates against European companies and creates unfair competition.

Maria de Maisie, a senior fellow at the Bruegel Institute, has two problems. First, the American inflation reduction act violates international trade rules, and second, it actually distorts competition.

 

EU introduces in response to US subsidy policy

 

The EU has been voicing its displeasure at the US for poaching Europe through high subsidies and has been discussing how to respond. Last week, March 16, the European Commission published the , in response to the U. S. to put pressure on European industry.

The core goal of is that by 2030, domestic manufacturing capacity for strategic net-zero Technologies will reach 40 per cent of the annual deployment needs of the EU. Under the act, the EU will support companies in eight strategic net zero technologies, including battery and storage technologies, sustainable biogas and biomethane technologies.

is part of the EU’s Green Agreement Industry Initiative, which aims to counter the negative impact of the US inflation reduction act on the EU.

, introduced last August, allows the government to provide nearly $370bn in subsidies and tax breaks to accelerate the development of homegrown industries such as electric vehicles and clean energy. European Union countries and industry people have repeatedly expressed dissatisfaction with the U. S. subsidy policy, and called on the EU to take measures to deal with.

French president, Maqueron said “with the inflation-cutting act creating a rift between the US and Europe, many businesses may be tempted to stop investing on the other side of the Atlantic.”

European Commission Executive vice-president, Dombrovskis said “subsidies under discriminate against EU car, renewable energy, battery and energy-intensive industries, the EU expresses serious concern about this. We have raised this concern with the United States many times and we demand fairness.”