China urges the US to correct discriminatory industrial policies and maintain the stability of the global industrial chain and supply chain of NEVs.

(Image credit: CnEVPost)

China has filed a complaint with the World Trade Organization (WTO) against the US electric vehicle (EV) incentives under the Inflation Reduction Act (IRA), which have effectively banned Chinese automakers from selling EVs directly in the United States.

To defend the interests of China's new energy vehicle (NEV) companies and a level playing field for the global NEV industry, China resorted to the WTO dispute settlement mechanism on March 26 over measures in the US IRA related to subsidies for NEVs, according to a question-and-answer session released today by China's Ministry of Commerce.

The US introduced the IRA and its implementing regulations in the name of addressing climate change, low carbon and environmental protection, the statement noted.

The policy takes the use of products from specific regions such as the United States as a prerequisite for subsidies, and has formulated a discriminatory subsidy policy for NEVs that excludes products from China and other WTO members, the statement said.

These practices distort fair competition, seriously disrupt the global NEV industry chain and supply chain, and violate WTO rules, which China firmly opposes, the statement said.

China firmly defends the rule-based multilateral trading system and respects the legitimate rights of WTO members to implement industrial subsidies under the framework of the rules to promote their economic and social development, according to the statement.

China urged the US to abide by WTO rules, respect the development trend of the global NEV industry, correct discriminatory industrial policies timely, and maintain the stability of the global industrial chain and supply chain of NEVs, the statement said.

The IRA, which went into effect in August 2022, includes a $7,500 tax credit for consumers who purchase eligible EVs in the US.

This requires EVs to be built in North America and use locally produced batteries, which puts automakers that import vehicles at a disadvantage.

In October 2022, William Li, founder, chairman, and CEO of Nio (NYSE: NIO), said in an interview with German media outlet Heise Autos that the company planned to enter the US market by the end of 2025, but US policy was complicating matters.

In a June 2023 interview with Bloomberg, BYD (HKG: 1211, OTCMKTS: BYDDY) executive vice president Stella Li said, " The US market isn't under our current consideration".

"I strongly believe that the IRA may slow down EV adoption in the US," she said.

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