Any significant reduction or rollback of Inflation Reduction Act support for electric vehicles would benefit China, according to General Motors Jon McNeill, member of the board of directors.
“I think we are at risk of losing share of auto manufacturing to China. We really do, globally,” said McNeill, former tesla president, co-founder and CEO of DVx Ventures, said Wednesday during CNBC's “Squawk on the Street.”
The 2022 IRA includes incentives for consumers to purchase electric vehicles, as well as significant support for auto manufacturers and suppliers to produce fully electric vehicles and their components in North America instead of abroad.
McNeill, in an email to CNBC, said the IRA is offering incentives to both manufacturers and consumers “to level the playing field” against Chinese car companies.
The expansion of Chinese automakers has been a growing concern for companies from Detroit to Germany. Global automakers are worried that BYD and other Chinese rivals could flood their markets, undermining domestic production and vehicle prices.
The IRA is also a potential issue in the upcoming presidential election in November. There have been recent reports in the media that if former President Donald Trump is elected to a second term, he would destroy many of the Biden administration's climate and clean energy initiatives, such as the $430 billion IRA.
Republican presidential candidate and former US President Donald Trump attends a campaign event in Freeland, Michigan, United States, on May 1, 2024.
Brendan Mcdermid | Reuters
Trump has alluded to such measures. He said at a May 1 rally in Wisconsin that upon taking office, he would “impose an immediate moratorium on all new grants and donations for spending under Joe Biden's giant socialist bills, like the so-called Tax Reduction Act.” inflation”.
“We're going to save all that money. It's not helping you at all. It's not doing you anything. It's just like a political game,” Trump said.
To truly achieve a full repeal of the IRA, Trump would need Republican majorities in both houses of Congress, which is unlikely, although possible. Furthermore, those hypothetical Republican majorities would need to put IRA rollbacks at the top of their list of legislative priorities, which is also not guaranteed.
However, in a second term, Trump could further delay the implementation of IRA policies, which have already been implemented more slowly than some would like due to the complexities of the law.
McNeill said he has been closely watching the political environment surrounding the IRA. He said any changes should be a bipartisan discussion rather than any kind of Republican rollback or reduction.
McNeill noted that the Chinese government has been supporting its domestic automakers with billions of dollars in assistance and subsidies, 0% financing and lower labor costs, among other incentives.
Production is now scheduled to begin at the former Detroit-Hamtramck Assembly Plant, less than two years after GM announced a massive $2.2 billion investment to completely renovate the facility and build a range of all-electric trucks and SUVs. .
Photo by Jeffrey Sauger for General Motors
“It becomes very difficult to compete at that price level or that cost level with the United States, so a lot of people think it's really important to protect American manufacturers from that,” he said.
To help American automakers compete with Chinese companies, President Joe Biden last week announced plans to quadruple tariffs on electric vehicles made in China, raising them from 25% to 100%.
However, several automotive and trade experts told CNBC that the tariff increase is a short-term protectionism bill that may delay, but will not prevent, Chinese automakers from coming to the U.S. with electric vehicles.
The tariffs on electric vehicles and other increases on battery materials were part of a broader package of new tariff rates on $18 billion worth of Chinese imports.
—CNBC Rebecca Picciotto contributed to this report.
