German carmakers fear hit from Biden’s green subsidies
THE German car industry has called for a European response to President Joe Biden’s $369bn (£304bn) green subsidies to prevent it from falling behind as it battles high energy costs.
The US Inflation Reduction Act should act as a “wake-up call” to European policymakers, said Hildegard Müller, president of the German car lobby group VDA, as it unveiled sluggish production growth for the car industry.
Germany has spent hundreds of billions of euros in cutting energy costs for households and businesses, but the help is “not suitable”, Ms Müller told a press conference. “We need more energy and consequential help for the economy,” she added. “Other global regions are overtaking us.”
The average cost in electricity to produce a car in Europe has risen to €800 (£660), she added, while in the US it is €250.
The United States is offering tax breaks for customers buying Americanmade electric cars, but not imports from European carmakers or those made in Britain. It is also spending $60bn on clean energy including promoting solar and wind power.
The US insists the act is to prevent American manufacturers being unfairly challenged by China, but the subsidy threatens carmakers outside the 20 nations with which the US has a free trade deal, none of which is in Europe, industry figures and politicians have warned.
Last month Kemi Badenoch, the International Trade Secretary, said Mr Biden’s subsidy will “harm multiple economies and impact global supply chains in batteries, electric vehicles and wider renewables”.
She was joined by Andy Palmer, the former Aston Martin boss and chairman of Inobat, a European battery maker, who said: “If the UK doesn’t react, that ultimately hollows out investment into automotive supply chains into Britain.”
While Ms Müller stopped short of asking for a similar subsidy to the Inflation Reduction Act, she said that the US “has recognised what they need to do.”
Germany will make 10.3m cars this year, the VDA trade body estimates, below its pre-pandemic production of 11.4m.