Author: Zhu Yulong

In November 2022, the United States sold a total of 79,935 new energy vehicles (65,338 pure electric vehicles and 14,597 plug-in hybrid vehicles), a year-on-year increase of 31.3%, and the penetration rate of new energy vehicles is currently 7.14%. The cumulative sales of new energy vehicles in 2022 reached 816,154, while the total for the full year of 2021 was around 630,000, and it is expected to reach about 900,000 this year.

I want to spend some space talking about the US market, and also to see if Biden’s efforts can get the new energy vehicle industry going in the US.

The “Inflation Reduction Act” invests $369 billion to address climate change, with a key focus on supporting the development of electric vehicles. We see that this policy also grasps the main point.

◎ New vehicle tax exemption: Provides a tax exemption of $7,500 per vehicle, with the subsidy period valid from January 2023 to December 2032. The previous subsidy cap of 200,000 vehicles per manufacturer has been removed.

◎ Used vehicles (less than $25,000): Tax exemption is 30% of the old car sales price, up to $4,000, with the subsidy period valid from January 2023 to December 2032.

◎ Tax exemption for new energy charging infrastructure extended to 2032, with a maximum of 30% of the cost eligible for a tax exemption, and the upper limit of the tax exemption increased from the previous $30,000 to $100,000.

◎ $1 billion is used for clean heavy-duty vehicles, such as school buses, public buses, and garbage trucks.

New Energy Vehicle Supply in the US Market

In terms of product supply, the US market is lacking, to the point where the Nissan LEAF is still among the leading models.

General Motors

Due to product recalls, General Motors’ production quantity in 2022 is relatively low. The planned production capacity for 2025 is 1 million, with 600,000 units expected to be produced. Therefore, in 2023, products such as EQUINOX Pure Electric and Blazer EV will be launched one after another to achieve the target of 1 million from 2023-2025. Thus, the production is likely to reach 200,000 next year. Among them, Bolt BEV’s output is clear that it needs to reach 70,000 units.

2023 is still a transitional period for General Motors. As joint venture battery factories begin production, the total output is achievable. The bill splits the tax credits into two equal parts of $3,750 per vehicle, and proposes localization of assembly for key materials and core components used in electric vehicles, such as batteries:

◎The first $3,750 per vehicle subsidy: 40% of the value of key battery materials (including nickel-manganese-cobalt-lithium, graphite, etc.) is to be extracted, processed or recycled and reused in North America by the United States or by countries that have signed a free trade agreement with the United States (in 2023). This proportion will increase by 10% each year from 2024 to 80% in 2027.

◎The second $3,750 per vehicle subsidy: More than 50% of the value of battery components (including positive and negative electrodes, copper foil, electrolytes, battery cores, and modules) are manufactured or assembled in North America (in 2023), and this proportion will be greater than or equal to 60% from 2024 to 2025. This proportion will increase by 10% each year from 2026 to 100% in 2029.

Therefore, General Motors can receive a $3,750 subsidy here.

### Ford

By the end of 2023, Ford’s global annual production capacity of electric vehicles will reach approximately 600,000, with annual production exceeding 2 million vehicles by 2026. Therefore, in terms of segmentation, Ford’s production in the United States in 2023 may be above 450,000 units.

◎Mustang Mach-E: 270,000 units per year (North America, Europe, and China, with the US accounting for about 200,000 units).

◎F-150 Lightning: 150,000 units per year (North America).

◎E-Transit: 150,000 units per year (North America and Europe, with an estimated 100,000 units in the United States).

◎New SUV: 30,000 units (Europe).

Stellantis is now divided into two operating parts. From the current situation, the North American electric battery is not ready yet. Plug-in hybrid is still the main force in 2023, which may greatly strengthen the plug-in hybrid production in the United States in 2023.

◎Dodge has launched its first plug-in hybrid vehicle, the HORNET, which uses the Alfa Romeo Tonale shared platform. A total of HORNET R/T plug-in hybrid models have been launched this time.

◎Jeep has launched its first pure electric vehicle, the Avenger. Starting with small pure electric SUV models (which are not sold in the United States), the first pure electric vehicle to be launched in North America will be a large SUV named Recon (production of Recon will begin in the United States in 2024).

Regarding Japanese and Korean products, they all involve a subsidy issue for assembly in North America.## Constraints on Subsidies

In the United States, subsidies have set preconditions that must be met simultaneously to qualify for application, which are:

• The new vehicle must be assembled in North America.
• Starting from 2025, key mineral materials for batteries cannot be extracted, processed, or recycled by foreign entities listed in the “Infrastructure Investment and Employment Bill”. Starting from 2024, battery components cannot be manufactured or assembled by foreign entities.
• Vehicle price requirements: eligible for electric trucks, trucks, and SUVs priced at no more than $80,000 and cars priced at no more than $55,000.
• Income requirements for buyers: Personal total income limit is $150,000, head of household is $225,000, joint applicants are $300,000.

For Tesla owners in California, it is not necessary to meet these conditions, and the overall effect of this subsidy is mainly focused on the three major American car manufacturers, General Motors, Ford, and Stellantis (Chrysler). Therefore, Tesla will have an improvement in the incremental growth next year, and these three companies will have the biggest demand increase for vehicles. Therefore, the current problem in the US market is constrained by battery capacity, unlike Europe, where vehicle growth is encouraged and local battery capacity lags behind. This time, the US is using the method of grabbing car companies to ground the local battery capacity.

Assuming that the sales volume of the entire electric vehicle in 2023 may be less than the expected 1.8 million, mainly due to the inability to catch up with the production capacity of batteries. Therefore, in 2023-2025, the sales completion rate of the entire electric vehicle can be estimated based on the North American battery production capacity. This is an important observation point.

Summary: Currently, China’s new energy vehicle market is actually leading the world by several years. Due to its large volume, we are transitioning to marketization, and this process does require us to go out. However, going to markets that are several years behind us and are still in the incubation period with government funds will inevitably encounter fierce resistance. This is the same as a few years ago when we didn’t want foreign cars and foreign batteries to take subsidies. How to operate with different time rhythms still needs some wisdom!# 这是标题

这是一段粗体和斜体的文字，还有一个链接。

下面是一个无序列表：

• 项目 1
• 项目 2

下面是一个有序列表：

1. 项目 A
2. 项目 B

这是一个引用。

这是一个代码块。

下面是一张图片：

下面是一段带有 HTML 标签的文本：

这是红色的文本。

This is a heading

This is a piece of bold and italic text, along with a link.

Here is an unordered list:

• Item 1
• Item 2

Here is an ordered list:

1. Item A
2. Item B

This is a blockquote.

This is a code block.

Here is an image:

Here is a block of text with HTML tags:

This text is red.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.