The U.S. Inflation Act was designed to boost the North American car industry, but in doing so it’s causing a nightmare for the ones based in Europe and Asia, making them reevaluate existing plans to ensure they can compete in the lucrative American market.
This week it emerged that Volkswagen has paused its plan to develop a new battery plant in Eastern Europe, and is instead prioritizing the build of a facility in North America that would allow it to benefit from U.S. government subsidies.
Volkswagen estimates it can rake in €9-10 billion ($9.5-10.5 bn) in subsidies and loans from the Inflation Act, according to The Financial Times, and has made EU officials aware of just how big the carrot is that the U.S. government is dangling. The FT says VW chiefs are holding off on the proposed Eastern Europe battery plant until they see what, if any, financial incentives the EU can offer in return.
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