Connect with us

Hi, what are you looking for?



BYD Says Inflation Reduction Act Keeping Out Cheap EVs — Does That Make Sense?

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News!

Chinese electric vehicle giant BYD thinks the USA’s Inflation Reduction Act is preventing the sale of cheap electric cars in the United States. Does this make sense?

We asked BYD’s CEO whether or not the company would bring its popular electric vehicles (EVs) to the US a couple of times in the past decade. We’ve been pushing for it for that long. Unfortunately, the time was never right and it was never seen as viable or smart. BYD is now the second largest full electric vehicle (BEV) seller in the world, only trailing Tesla and well ahead of the rest of the pack, and is the leading brand in plugin vehicle sales globally (that includes plugin hybrids). Now, asked about the matter of coming to the US, BYD’s Stella Li says that the US isn’t “under our current consideration” due to the Inflation Reduction Act of 2022. Well, that may have influence (and I’ll get to why in a moment), but the Inflation Reduction Act is quite new, so it certainly isn’t what kept BYD out of the US car market up until now.

“We need to make sure with each step, we can be successful,” Li, executive vice president, told Automotive News. “I strongly believe that the IRA may slow down EV adoption in the US.” Again, there may be some truth to what she is saying here, but I’m going to also have to discuss why BYD didn’t come to the US market before the IRA arrived, and how the IRA helps to resolve some of those core barriers. Also, we’ll have to get to the true crux of BYD’s gripes.

The US EV market has been a low priority for companies trying to sell electric cars. China and Europe have been their core areas of focus because those are the places where automakers were forced to sell electric cars or pay big fines (or just not be a notable player in the market). The US has had financial incentives for electric vehicles for years (up to $7,500 per car on the federal level alone). However, without such strong requirements to sell electric cars, automakers shrugged off the opportunity.

This is in part because of the essential component of electric cars: batteries. Electric vehicle sales have been growing rapidly globally, driven by that aforementioned growth in China and Europe. With strong growth, the battery supply chain has been reaching its limit rapidly as well. That has meant that less prioritized markets (ahem, USA) were out of luck. Customers in the US have complained for years about lack of supply and big dealer markups on the limited EVs that come to town. This is a core reason why.

The IRA is doing a lot to bring more supply to the US by subsidizing battery pack factories, battery cell factories, battery component mining, and battery component refining. That will enable a lot more solid EV growth in the country, especially as those various supply chain facilities ramp up and a true battery production ecosystem forms in the US.

Essentially, this is what China already did, well ahead of the US. And that’s one reason why it’s the global EV leader in volume terms. Also, really, that’s a key reason why BYD is not such a fan of the IRA and is now talking smack about it. BYD is the second largest battery producer in the world. It only trails CATL, another Chinese company. The IRA is specifically incentivizing EV battery production in the USA, including by changing the consumer EV subsidies to support vehicles produced in the US using US-made batteries. Naturally, all of those factors together are not exciting for BYD. BYD doesn’t want to produce batteries in the USA. And, yes, some of the more cheaply made Chinese electric vehicles would now be less competitive in the US compared to other EVs — but, really, were they coming to the US anyway? There’s no indication they were. However, what were coming to the US were various electric car models from different brands powered by BYD and other Chinese batteries. Now, those automakers and others are going to get batteries produced in Georgia, Alabama, Tennessee, Texas, Michigan, etc. It will take a little time, but the US will become competitive — more competitive than it ever would have if it hadn’t stimulated serious EV battery production within its borders.

I don’t think the IRA really reduces US competitiveness. To the contrary, it increases US competitiveness in the long term and adds more battery supply to the global EV market, which makes the global EV market more competitive as well. In short, it’s a net win for cheap EVs.

That’s my take on this “controversy.” What’s yours?

Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.

EV Obsession Daily!

I don't like paywalls. You don't like paywalls. Who likes paywalls? Here at CleanTechnica, we implemented a limited paywall for a while, but it always felt wrong — and it was always tough to decide what we should put behind there. In theory, your most exclusive and best content goes behind a paywall. But then fewer people read it!! So, we've decided to completely nix paywalls here at CleanTechnica. But...
Like other media companies, we need reader support! If you support us, please chip in a bit monthly to help our team write, edit, and publish 15 cleantech stories a day!
Thank you!

Tesla Sales in 2023, 2024, and 2030

CleanTechnica uses affiliate links. See our policy here.
Written By

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


You May Also Like

Clean Transport

Failure to meet demand for zero-emission trucks would present opportunity for Tesla and BYD, T&E says.

Consumer Technology

A consortium of US states and territories just announced a commitment to deploy 20 million heat pumps by 2030. Here’s why that matters.

Clean Transport

Sign up for daily news updates from CleanTechnica on email. Or follow us on Google News! A recent announcement from Shell in China shows...

Clean Power

Interior and Energy Departments Release Comprehensive Transmission Action Plan to Unlock America’s Vast Potential of Atlantic Offshore Wind Energy

Copyright © 2023 CleanTechnica. The content produced by this site is for entertainment purposes only. Opinions and comments published on this site may not be sanctioned by and do not necessarily represent the views of CleanTechnica, its owners, sponsors, affiliates, or subsidiaries.