TOKYO – According to unnamed government sources cited by the Kyodo news agency on Friday, Japan would request that the United States be more accommodating on the purchase incentives for non-American automakers for electric vehicle (EV) purchases.
The action comes in response to a statement by the South Korean foreign ministry, which stated that Seoul was looking for a three-year grace period on the U.S. Inflation Act to allow its automakers to continue getting EV incentives in the country.
The law only permits electric vehicles made in North America to qualify for tax credits.
According to the Alliance for Automotive Innovation, a trade organisation for the industry, credits for nearly 70% of the 72 models that were previously eligible terminated when President Joe Biden signed the legislation.
Midway through August, the Biden administration stated that up to $7,500 in tax credits were still available for roughly 20 models.
According to Kyodo, the Japanese government will soon submit a proposal to the U.S. Treasury department to modify the standards for tax credits. It also said it will collaborate with South Korea and European nations to make the request.
According to Kyodo, the government would work to ensure that vehicles exported from Japan that are nearly finished are eligible for tax benefits as long as the finishing touches are applied in either the US, Canada, or Mexico.
According to the article, it will also ask that Japan be included in the tax credit requirement that a specific proportion of the essential minerals used in automobile batteries be harvested and processed in the United States and other nations with which the United States has free trade agreements.
At a meeting in September in Los Angeles, Japanese Industry Minister Yasutoshi Nishimura voiced his concerns about the law to U.S. Commerce Secretary Gina Raimondo. The encounter may have violated the law, Nishimura reportedly informed his American counterpart, according to the Nikkei newspaper.
A significant Japanese car lobby, the Japan Automobile Manufacturers Association, stated in August that it was concerned about the law and will closely monitor developments.