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China-owned car company could get a boost from Biden tax credits meant to help U.S. automakers

by

Daily Caller News Foundation

  • The automotive arm of a large Chinese corporation, Zhejiang Geely Holding Group, is looking to gain a foothold in the U.S. market and may get a boost from President Joe Biden’s administration.
  • Polestar is hoping that some of the all-electric SUVs made at its upcoming South Carolina factory will qualify for a $7,500 consumer tax credit offered through Biden’s cornerstone climate law, the Inflation Reduction Act, which subsidize the purchase of electric vehicles, Yahoo Finance reported.
  • Geely chairman Li Shufu is a rare Chinese business leader who does not have membership in the Chinese Communist Party, but does serve as a member of a major “political consultative body” advising the Chinese government, according to the National Committee of the Chinese People’s Political Consultative Conference.

A Chinese conglomerate is looking to gain a foothold in the U.S. auto market and may get a boost from President Joe Biden’s administration.

Polestar — founded in 2017 by the Chinese corporation Zhejiang Geely Holding Group and its Swedish subsidiary Volvo — has most recently made inroads with the U.S. auto industry by becoming the latest in a series of auto companies to commit to using U.S.-based Tesla’s North American Charging Standard (NACS), a standardized charging port configuration for electric cars, according to Reuters. In addition to utilizing the NACS — which was partially subsidizedby the Biden administration — Polestar is hoping that some of the all-electric SUVs made at its upcoming South Carolina factory will qualify for a $7,500 consumer tax credit offered through President Joe Biden’s cornerstone climate law, the Inflation Reduction Act (IRA), which subsidize the purchase of electric vehicles, Yahoo Finance reported in late March.

The company will first launch a premium version of its upcoming Polestar 3 SUV in mid-2024, starting at roughly $84,000, but that price point would surpass the $80,000 threshold for SUVs to qualify for the credit, Yahoo Finance reported. To take advantage of the tax credits, Polestar plans to launch a cheaper variant with fewer amenities soon after production begins.

The Biden administration has made competition with China a priority as relations between the two nations have soured in recent months. While IRA tax credits do not directly finance the Chinese conglomerate, the administration expects that tax credits will help sales of qualifying vehicles — such as the upcoming Polestar 3 variant.

“These commitments are part of President Biden’s Investing in America agenda to spur domestic manufacturing, strengthen supply chains, boost U.S. competitiveness and create good-paying jobs,” reads a White House fact sheet. The statement continues, arguing that the IRA “adds and expands tax credits for purchases of new and used EVs—helping bring the benefits of clean energy to communities across the nation.”

The more expensive Polestar 3 variant could still qualify for the $7,500 tax credit through a provision that allows some leased electric vehicles to qualify for the credit regardless of country of origin or cost, Yahoo Finance reported. Foreign automakers lobbied heavily for this exemption, and some analysts expect it to make leasing the primary way U.S. consumers acquire electric vehicles, at least in the near future, Bloomberg reported.

“It will be a big milestone for our brand,” Polestar CEO Thomas Ingenlath said in a 2021 interview with CNBC, referring to the South Carolina factory. “The expression of the car will be so much Polestar and show where our brand is going in the future ahead.”

Geely chairman Li Shufu is a rare Chinese business leader who does not have membership in the Chinese Communist Party, but does serve as a member of the 14th National Committee of the Chinese People’s Political Consultative Conference (CPPCC), which describes itself as a “national political consultative body” advising the Chinese government. The firm’s $1.8 billion purchase of Volvo from Ford in 2010 was largely financed by low-interest loans from a trio of Chinese cities, where the company would eventually locate a pair of factories and a technology center, according to Reuters.

Chinese electric vehicle firms have increasingly been making progress in both Europe and the U.S., leveraging their sheer dominance in mineral supply chains and technical know-how in electrical vehicles to muscle into Western markets, Politico reported on Monday. Roughly 5.4 million electric vehicles, around two-thirds of the global total, were registered in China last year, and 19% of all cars sold in China last year were fully electric.

Chinese automakers “are leveraging their specific product know-how over incumbent European brands that employ a lot of people to make engines,” an anonymous auto manager told Politico. “[Volkswagen] would need to lay off half its staff” to meet the efficiency of its Chinese competitors, the manager added.

Several major clean energy projects — particularly in battery manufacturing and power generation — looking to take advantage of IRA tax credits rely on Chinese technology or intellectual property.

Geely, Polestar and The White House did not immediately respond to the Daily Caller News Foundation’s request for comment.

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Republished with permission from Daily Caller News Foundation

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