EU, US join to resolve EV battery credit spat

BRUSSELS — The U.S. and the European Union have set up a task force that will work toward resolving a dispute over electric vehicle batteries that the EU says would discriminate against manufacturers in the 27-nation bloc and break World Trade Organization rules.

Under the Inflation Reduction Act passed by Congress in August, electric car buyers in the U.S. are eligible for a tax credit of up to $7,500 as long as the vehicle runs on a battery built in North America with minerals mined or recycled on the continent. The EU believes that the measure is a potential trans-Atlantic trade barrier discriminating against foreign producers.

A first meeting will take place next week. “The Task Force will address specific concerns raised by the EU related to the IRA,” the European Commission said in a statement. “Both sides agreed on the importance of close coordination to support sustainable and resilient supply chains across the Atlantic, including to build the clean energy economy.”

Democratic members of Congress included the credit in the climate and health care policy law as a way of incentivizing domestic battery and electric vehicle production. But manufacturers in Europe and South Korea, which sell millions of vehicles in the U.S., have threatened to lodge legal complaints with the World Trade Organization.

The European Commission said last month that parts of the law can help fight climate change by accelerating the transition away from fossil fuels.

But the EU’s executive branch also expressed concerns about the potential discriminatory nature of the electric vehicle tax credit provision.