Belgium, (Brussels Morning Newspaper) The European Automobile Manufacturers Association (ACEA) called on the EU to adopt measures in response to the US Inflation Reduction Act (IRA).
The lobby group stressed the importance of putting in place counter-measures to strengthen the industry in the EU, according to a Reuters report on Wednesday.
ACEA head and CEO of Renault Group Luca de Meo warned in an interview on Tuesday that automobile manufacturers from the bloc are already moving production to the US.
“I think the European community must react… you need to find counter-measures to protect industry,” he stressed and added, “I don’t much like the word protectionism because it leads to inflation and inefficiency.”
As the cost of energy is rising and spilling over to other sectors of the EU economy, carmakers are shifting production of electric vehicles to the US, with VW building cars in Tennessee and Mercedes in Alabama.
In addition, BMW announced plans to start building at least six EV models in North Carolina by the end of the decade.
Dependence on China
German automobile industry lobby VDA noted that carmakers want to source batteries near their production plants, but stressed that materials needed to make them largely come from China.
The group added that establishing new supply chains to bypass China is complicated and would take a lot of time and effort. “It is important to prevent US practices resulting in a spiral of protectionism,” VDA concluded.
ACEA called on the EU to provide energy price relief and relax rules to attract investors and production of components like batteries.
The EU Council is to meet this week to discuss ways to respond to the IRA as some bloc members expressed concerns that US subsidies will drive green sector companies away from the EU.
Besides a response to the IRA, bloc members will examine plans to reduce dependence on imports from China and look to reach an agreement by the end of the month.
The European Commission previously proposed to relax state aid rules for the green sector and investments in renewables, which France and Germany are in favor of, while other bloc members warn the move would distort competition.
