EU and US discussing an exemption that would include EVs from European members in US tax credits
The European Union has asked the United States to include EVs, batteries, and other sustainable products sold on US soil in federal tax credits, similar to benefits it currently offers its North American neighbors. According to a recent report, the US and EU are in discussions about what’s possible.
A large prompter in the US reaching a critical mass point of EV adoption has been the federal and state tax credits in place for electric vehicles and their charging infrastructure. Depending on the vehicle, a person’s filing status, and annual income, US taxpayers can qualify for up to $7,500 back at the end of the fiscal year, not to mention additional exemptions available at the state level.
US automakers like Tesla and GM surpassed the 200,000 unit threshold for EV sales years ago, thus disqualifying them from tax credits, while plenty of EVs from European automakers still qualified. Since taking office, the Biden administration has been adamant about expanding electrification and electrical grid support throughout the US, including federal fleets, school buses, and passenger mobility.
This past August, President Biden signed what could be one of the most noteworthy pieces of legislation in his presidential legacy with the Inflation Reduction Act (IRA). The bill extends federal tax credits through 2032, slashes the 200K unit threshold, and promotes North American EV manufacturing.
As one would imagine, European countries and their automakers have been less excited about new tax credit terms under the IRA, including the requirement that the vehicles, their batteries, and the majority of battery components must be built in North America.
Now, those European countries are speaking up and are asking the US to once again include its EVs in the revised tax credits, despite the pro-North American assembly terms.
Could European EVs soon qualify for US tax credits?
Possibly! According to a report from Automotive News Europe, the prospect of European EVs qualifying for tax credits in the US is at least being discussed. Czech trade minister Jozef Sikela said the European Union has asked the US to treat its member’s EVs, batteries, and other charging equipment as it would for Mexico and Canada, qualifying for revised tax credits.
As members of North America sharing a border with the United States, one could argue Mexico and Canada are more incentivized to support US production and commerce and are, thus, worthy of credits. The EU argues otherwise, stating that the Inflation Reduction Act discriminates against European automakers and other manufacturers.
At its core, the revised terms of federal tax credits in the IRA are not necessarily to keep certain countries or automakers out but to promote manufacturing and supply chains in the US and its neighboring countries. The EU’s counter to that argument is that it currently offers the same tax credits for EVs and their materials, regardless if they’re made in the EU or US.
Sikela, whose home country currently holds the rotating presidency of the EU, was part of a recent meeting in Prague between EU trade ministers and US Trade Representative Katherine Tai. Following the meeting, Sikela said there was a willingness on both sides to reach some form of a deal that would qualify European EVs for US tax credits.
To what extent a potential deal may bring EU products remains unclear, but Sikela is already managing expectations:
We are expecting a derogation (in the US IRA) for EU member states – ideally we would like to have the same as Canada and Mexico, but we have to be realistic and see what we can negotiate.
EU Trade Commissioner Valdis Dombrovskis said a task force will meet for the first time this week to assist in solving the issue. He followed up by saying:
We are focusing on a negotiated solution before we move on to other considerations.
The new terms for federal tax credits in the US will kick in on January 1, 2023, and will affect many local automakers as well as those in European countries. More to come on this story as it develops.
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Wind energy powered 20% of all electricity consumed in Europe (19% in the EU) in 2024, and the EU has set a goal to grow this share to 34% by 2030 and more than 50% by 2050.
To stay on track, the EU needs to install 30 GW of new wind farms annually, but it only managed 13 GW in 2024 – 11.4 GW onshore and 1.4 GW offshore. This is what’s holding the EU back from achieving its wind growth goals.
Three big problems holding Europe’s wind power back
Europe’s wind power growth is stalling for three key reasons:
Permitting delays. Many governments haven’t implemented the EU’s new permitting rules, making it harder for projects to move forward.
Grid connection bottlenecks. Over 500 GW(!) of potential wind capacity is stuck in grid connection queues.
Slow electrification. Europe’s economy isn’t electrifying fast enough to drive demand for more renewable energy.
Brussels-based trade association WindEurope CEO Giles Dickson summed it up: “The EU must urgently tackle all three problems. More wind means cheaper power, which means increased competitiveness.”
Permitting: Germany sets the standard
Permitting remains a massive roadblock, despite new EU rules aimed at streamlining the process. In fact, the situation worsened in 2024 in many countries. The bright spot? Germany. By embracing the EU’s permitting rules — with measures like binding deadlines and treating wind energy as a public interest priority — Germany approved a record 15 GW of new onshore wind in 2024. That’s seven times more than five years ago.
If other governments follow Germany’s lead, Europe could unlock the full potential of wind energy and bolster energy security.
Grid connections: a growing crisis
Access to the electricity grid is now the biggest obstacle to deploying wind energy. And it’s not just about long queues — Europe’s grid infrastructure isn’t expanding fast enough to keep up with demand. A glaring example is Germany’s 900-megawatt (MW) Borkum Riffgrund 3 offshore wind farm. The turbines are ready to go, but the grid connection won’t be in place until 2026.
This issue isn’t isolated. Governments need to accelerate grid expansion if they’re serious about meeting renewable energy targets.
Electrification: falling behind
Wind energy’s growth is also tied to how quickly Europe electrifies its economy. Right now, electricity accounts for just 23% of the EU’s total energy consumption. That needs to jump to 61% by 2050 to align with climate goals. However, electrification efforts in key sectors like transportation, heating, and industry are moving too slowly.
European Commission president Ursula von der Leyen has tasked Energy Commissioner Dan Jørgensen with crafting an Electrification Action Plan. That can’t come soon enough.
More wind farms awarded, but challenges persist
On a positive note, governments across Europe awarded a record 37 GW of new wind capacity (29 GW in the EU) in 2024. But without faster permitting, better grid connections, and increased electrification, these awards won’t translate into the clean energy-producing wind farms Europe desperately needs.
Investments and corporate interest
Investments in wind energy totaled €31 billion in 2024, financing 19 GW of new capacity. While onshore wind investments remained strong at €24 billion, offshore wind funding saw a dip. Final investment decisions for offshore projects remain challenging due to slow permitting and grid delays.
Corporate consumers continue to show strong interest in wind energy. Half of all electricity contracted under Power Purchase Agreements (PPAs) in 2024 was wind. Dedicated wind PPAs were 4 GW out of a total of 12 GW of renewable PPAs.
Read more: Renewables could meet almost half of global electricity demand by 2030 – IEA
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In the Electrek Podcast, we discuss the most popular news in the world of sustainable transport and energy. In this week’s episode, we discuss the official unveiling of the new Tesla Model Y, Mazda 6e, Aptera solar car production-intent, and more.
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The Chinese EV leader is launching a new flagship electric sedan. BYD’s new Han L EV leaked in China on Friday, revealing a potential Tesla Model S Plaid challenger.
What we know about the BYD Han L EV so far
We knew it was coming soon after BYD teased the Han L on social media a few days ago. Now, we are learning more about what to expect.
BYD’s new electric sedan appeared in China’s latest Ministry of Industry and Information Tech (MIIT) filing, a catalog of new vehicles that will soon be sold.
The filing revealed four versions, including two EV and two PHEV models. The Han L EV will be available in single- and dual-motor configurations. With a peak power of 580 kW (777 hp), the single-motor model packs more power than expected.
BYD’s dual-motor Han L gains an additional 230 kW (308 hp) front-mounted motor. As CnEVPost pointed out, the vehicle’s back has a “2.7S” badge, which suggests a 0 to 100 km/h (0 to 62 mph) sprint time of just 2.7 seconds.
To put that into perspective, the Tesla Model S Plaid can accelerate from 0 to 100 km in 2.1 seconds. In China, the Model S Plaid starts at RBM 814,900, or over $110,000. Speaking of Tesla, the EV leader just unveiled its highly anticipated Model Y “Juniper” refresh in China on Thursday. It starts at RMB 263,500 ($36,000).
BYD already sells the Han EV in China, starting at around RMB 200,000. However, the single front motor, with a peak power of 180 kW, is much less potent than the “L” model. The Han EV can accelerate from 0 to 100 km/h in 7.9 seconds.
At 5,050 mm long, 1,960 mm wide, and 1,505 mm tall with a wheelbase of 2,970 mm, BYD’s new Han L is roughly the size of the Model Y (4,970 mm long, 1,964 mm wide, 1,445 mm tall, wheelbase of 2,960 mm).
Other than that it will use a lithium iron phosphate (LFP) pack from BYD’s FinDreams unit, no other battery specs were revealed. Check back soon for the full rundown.
Source: CnEVPost, China MIIT
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