The European auto industry in the US: IRA or not IRA

The European auto industry in the US: IRA or not IRA

Lets go. Within a week, Thierry Breton he will take his pilgrim staff to Washington. A few days later, here they are Bruno Mayor and Robert Habeck who will follow the same path. Why this sudden attraction to the United States on the part of the European commissioner and the economic ministers of France and Germany? It is that in the United States, since the first of January, the IRA (Anti-Inflation Act) came into force, and as a result, a tidy sum intended to help industries seeking to reduce C02 emissions. The set amount is not less than 365 billion dollars, approximately 338 billion of our euros.

Mana that Europe feels completely isolated, and especially its car industry. Because this American IRA offers 7,500 euros of tax credit to every American who buys an electric car, with the strict condition that it is made in the United States, Canada or Mexico. It also provides great support to industrialists who want to set up there. Obviously, France does not want to see the last of its industrialists flee, even if the country is partially affected by this car protection, just because. Stellantis it’s on the spot, and type like Jeep, RAM Where Chrysler which are collected locally.

Except in the case of Jeep Avengers. In addition to its small size, the 2023 model car cannot qualify for US subsidies as it is manufactured in Poland. Is this why the baby Jeep shouldn’t be ordered there? In addition to the exclusion of support, its small size is not really suitable for the domestic market.

The Jeep Avenger is not included in the US market, because it is made in Poland, and because it is too small for the US.

On the other hand, the Germans of volkswagen, Audi, mercedes, BMW and Porsche look at the gray. Especially since for Germany’s top three, America is an important market and the production units on site are not enough to slip through the cracks. So the political leaders of the country are worried, helped by France which, good girl, intends to support and appeal to Joe Biden from next week.

Since we are military partners, let’s be commercial

Do they have a chance to be heard by the Washington administration? There is little certainty if we examine the central argument of the Europeans. Because they intend to use the argument of curiosity, more military than commercial. “We are your allies, especially in NATO? Were we going for this operation against Chinese manufacturers? they will plead in America. I’m not sure they have the ear of Joe Biden’s advisers on this issue. Because Americans have never mixed military towels with commercial towels and in this latter area, the war has been going on between the two entities.

I am not sure that Joe Biden is sensitive to the string of allied countries.
I am not sure that Joe Biden is sensitive to the string of allied countries.

On the other hand, there is an argument that may prove more convincing. This is “An eye for an eye, a tooth for a tooth” which may hit the mark if used one day. For months, behind the scenes, Emmanuel Macron and Ursula Van der Leyen, President of the European Commission prepare the answer: the European IRA. No figures or dates have been set at the moment, but the calculations involved are astonishing, so much so that those close to the French president are talking about such a huge cost, if it is the same as that of America, that it could cost the Member. It says two points of GDP in the first year of starting the program. This sum, like the original IRA, would be intended to subsidize European industries only, and provide a green bonus to individuals and companies that purchase electric vehicles.

European-style Ira?

Of course, this Law to reduce inflation in our own style it is only at this time the method of pressure that Thierry Breton and the French and German ministers intend to use in Washington. But the Biden administration has already gotten the message and let its guard down a bit. A new step has been added tocurrent inflation in the last minute since the beginning of the month, services benefit from a tax credit of 7,500 dollars, even if they are not made on site.

Clearly, French politicians want more and will make it known. Will they win? The inflation that is invading Europe allows Americans to consider that the old continent will not reach the end of its IRA, which will prove very expensive for our economy. Biden is convinced that Macron and Van der Leyen are ignoring it. What is it in reality? Cards should, in any case, be revealed quickly.