BiMAGA
There were two huge bills signed by President Biden so far this past year:
- the Inflation Reduction Act (IRA), signed August 16, 2022
- the CHIPS and Science Act, signed August 9, 2022
Updates
December 6, 2022:
President Biden is getting into the holiday spirit by slapping a bow and some American Flag wrapping paper on a sweet little surprise for Europe...The Inflation Reduction Act.Inside they'll find a wide array of pro-American manufacturing programs that are less than favorable for the Europeans. Europe has enjoyed 75 years of safe and lucrative trade thanks to the guns and butter deal we know as globalization, but the Americans have outgrown that model.They are ready to bring some of their manufacturing home, and not in a small quantity...we're talking 12 zeros here.This comes at a time when Biden needs some new footing with the organized labor faction and nothing speaks louder than money. Europe isn't happy about the American's leveling out the playing field and WTO action has been threatened, but at the end of the day, the Biden administration is going to get its way.
Original Post
There were two huge bills signed by President Biden so far this past year:
- the Inflation Reduction Act (IRA), signed August 16, 2022
- the CHIPS and Science Act, signed August 9, 2022
These were the most protectionist, "make-America-great-again" acts that even a GOP president would have supported. Yes, there were things in both bills that conservatives may not have wanted but that's what compromise is all about. And maybe I'm wrong. That's fine.
But both are already having a huge impact on the global and the US economy. I was reminded of that when reading the UK EV Arrival story today (see below).
The first act, the IRA, addressed the climate (global warming); health (expanded Obamacare); and tax reform (the wealthy to "pay their fair share").
This act will have a huge effect on global automobile and truck manufacturing, and it absolutely favors the US (maybe the US and Mexico) over Europe and Asia.
The second act seeks to bolster the US semiconductor supply chain and promote research and development of advanced technologies in the United States. It essentially cuts off China at the knees with regard to semiconductor technology.
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The IRA: The Inflation Reduction Act
Re-posting from August 15, 2022: EVs -- The Biden Bill -- SIGNED August 16, 2022
The Biden Bill, EVs-2022, is an "investors' bill. The bulk of the money goes to US auto manufacturers. No money to manufacturers outside North America; and most incentives target manufacturers, not consumers.
- cash burn
- graphite
- not for me. "Energy transition is dead" is followed here.
- EVs charging.
The Biden Bill -- the Inflation Reduction Act (climate, health, and tax)
MSN-Reuters, August 15, 2022: the article is a bit confusing. Data points:
- the bill will eliminate EV tax credits for most models currently getting up to $7,500 effective (sic)
- restructures the existing $7,500 new EV tax credit
- creates a new $4,000 rebate for used EVs
- but the bulk goes to auto manufacturers: loan programs; tax credit and grant programs
New law:
- 70% of 72 US electric, plug-in hybrid, and fuel-cell EVs that currently qualify, ineligible
- none would qualify for the full credit when additional sourcing requirements go into effect
CBO estimate:
- 11,000 new EVs will receive tax credits in 2023 assuming $7,500 per vehicle
Those that won't qualify:
- Audi of America
- only its plug-in hybrid will retain existing federal credit through the end of 2022
- Kia
- Porsche
- any vehicles assembled outside of North America
- huge hit for EU, South Korea, and many others
200,000 vehicle cap:
- GM
- Tesla
New credits available for those who exceed 200,000-cap
- stricter sourcing and income rules
Comment: this looks exactly like a bill that Trump would have signed:
- bill would eliminate tax credits for the "wealthy"
- bill would favor middle income
- money targets the manufacturers and the workers in those industries, not the buyers
- vehicles need to be assembled in North America (including Canada and Mexico)
- for investors: another open-book test
- the reason 70% of 72 US electric, plug-in hybrid, and fuel-cell EVs that currently qualify would no longer qualify: assemby must be in US. I'm sure Trump would have wanted the same thing
- for companies like Apple, this is huge -- they now have the "new" rules
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Update
The UK-based Arrival: this is a UK de-industrialization story, link here --
- more and more, looks like a zombie company
- moving from UK to US in last-ditch effort "to squeeze the most out of its remaining capital"
- cash on hand: $330 million
- Charlotte, NC
- will cut production from 400 vehicles to 20 and postponed development of its battery-electric buses to focus on vans
Arrival, which went from stealthy electric vehicle startup to a publicly traded company via a SPAC merger, said it will now put the bulk of its remaining resources toward producing a “family of van products” for the U.S. market. It will also put funds toward related technologies such as core components, composite materials, mobile robotics and what it describes as software-defined factories.
But look at this:
The major factors in the company’s decision to shift focus to developing its U.S. business included the tax credit recently announced as part of the Inflation Reduction Act — expected to offer between $7,500 and $40,000 for commercial vehicles, the large addressable market size, and substantially better margins.
EV startup Arrival first caught investors' attention with its microfactory approach and a wide variety of prototypes, from buses to passenger EVs.
The company had a lot on its plate coming into 2022, and recently chose to prioritize its electric Van model for production after achieving Bus and Van certification in the EU in the first half of the year.
Despite starting Van pre-production in the UK just a month ago, Arrival is suddenly shifting its manufacturing plans to the US as a part of restructuring its entire business.
That's right: Arrival is headed stateside, citing the Inflation Reduction Act (IRA), which is set to offer between $7500 and $40,000 in tax credits for commercial vehicles as one of the major factors in its decision.
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