Japan Says America’s Updated EV Tax Credits Are Illegal

Matt Posky
by Matt Posky
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japan says americas updated ev tax credits are illegal

Following the passing of the U.S. “ Inflation Reduction Act,” South Korea came to the defense of Hyundai Motor Group to urge America to postpone things until the automaker completed a facility in Georgia intended to manufacture all-electric vehicles. Hyundai chairman Chung Eui-sun had reportedly expressed serious concerns that revamping and renewing the EV credit scheme disproportionately advantaged certain manufacturers – sending the Korea Automotive Industry Alliance into lobbying overdrive.

The South Korean government was happy to assist by suggesting that the United States may be in violation of WTO regulations as well as the Korea-U.S. free trade agreement. And Yasutoshi Nishimura – the Japanese Minister of Economy, Trade and Industry – seems to be following suit roughly a week later. Japan likewise feels that the Biden administration may have violated international law and is backed by its own regional lobbying groups representing the automotive sector.


Automotive News reported that Nishimura expressed concerns about the new law while meeting with U.S. Commerce Secretary Gina Raimondo in Los Angeles on Wednesday. Though the talks were actually part of larger discussions surrounding the Indo-Pacific Economic Framework – which was introduced by the Biden administration as a revamped version of the contentious Trans-Pacific Partnership Agreement earlier this year. 

As with Korea, Japan’s big gripe with the Inflation Reduction Act of 2022 revolves around how it fails to help its automakers financially. With the global industry having been the beneficiary of the previous U.S. EV tax credit scheme for over two decades, it now appears to expect that government handouts will continue indefinitely. 

But the new deal dissolved the previous quota system (which several companies hadn’t yet reached) to introduce one based on content requirements designed to help localize manufacturing in North America. The Alliance for Automotive Innovation (AAI) – representing practically every global automaker that currently exists – claimed that the new legislation effectively stripped credits from 70 percent of the 72 models that were previously eligible. 

Since then, the Biden administration has pushed back by stating that there were roughly 20 plug-in hybrids and pure battery electric cars that could still benefit under the new plan. However, new provisions pertaining to battery content requirements are scheduled to come into effect at the beginning of 2023, and they are likely to shrink that number dramatically

The Japan Automobile Manufacturers Association, the country’s largest auto lobby, has said it remains concerned about the new law and would be monitoring future developments.

[Image: S.Jettar/Shutterstock]

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Matt Posky
Matt Posky

Consumer advocate tracking industry trends, regulation, and the bitter-sweet nature of modern automotive tech. Research focused and gut driven.

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  • SCE to AUX SCE to AUX on Sep 10, 2022

    Mr Biden is a nationalist without the MAGA hat.

    • See 2 previous
    • Dukeisduke Dukeisduke on Sep 12, 2022


  • 285exp 285exp on Sep 12, 2022

    Apparently, the world isn’t worth saving unless Democrat special interest groups get paid off.

  • Marky S. I own the same C.C. XSE Hybrid AWD as in this article, but in Barcelona Red with the black roof. I love my car for its size, packaging, and the fact that it offers both AWD and Hybrid technology together. Visibility is impressive, as is its small turning circle. I consider the C.C. more of a "station wagon" by proportion, rather than an “SUV.” It is fun to drive, with zippy response and perky pick-up. It is a pleasant car to drive and ride in. It is not trying to be a “Butch Off-Roader”, or a cosseting “Luxury Cruiser.” Those are not its goals or purpose. The Corolla Cross XSE Hybrid AWD is a wonderful All-Purpose Car (O.K. – “SUV” if you must hear me say it!) with a combination of all the features it has at a reasonable price.
  • Ernesto Perez There's a line in the movie Armageddon where Bruce Willis says " is this the best idea NASA came up with?". Don't quote me. I'm asking is this the best idea NY came up with? What's next? Charging pedestrians to walk in certain parts of the city? Every year the price for everything gets more expensive and most of the services we pay for gets worse. Obviously more money is not the solution. What we need are better ideas, strategies and inventions. You want to charge drivers in the city - then put tolls on the free bridges like the Brooklyn, Manhattan and Williamsburg bridges. There's always a better way or product. It's just the idiots on top think they know best.
  • Carsofchaos The bike lanes aren't even close to carrying "more than the car lanes replaced". You clearly don't drive in Midtown Manhattan on a daily like I do.
  • Carsofchaos The problem with congestion, dear friends, is not the cars per se. I drive into the city daily and the problem is this:Your average street in the area used to be 4 lanes. Now it is a bus lane, a bike lane (now you're down to two lanes), then you have delivery trucks double parking, along with the Uber and Lyft drivers also double parking. So your 4 lane avenue is now a 1.5 lane avenue. Do you now see the problem? Congestion pricing will fix none of these things....what it WILL do is fund persion plans.
  • FreedMike Many F150s I encounter are autonomously driven...and by that I mean they're driving themselves because the dips**ts at the wheel are paying attention to everything else but the road.