U.S. Market: Policies to Expand Semiconductor Production and Popularize EVs

Major revision of EV purchase support measures, California to be 100% ZEVs by 2035



GMC Hummer EV Pickup
GMC Hummer EV SUV (Delivery from early 2023)
(Exhibited at the NAIAS 2022)

  This report provides an overview of three bills enacted or announced in detail in August 2022 to promote ZEV adoption in the U.S. market.

  On August 9, the CHIPS and Science Act was passed to support the semiconductor industry. With a budget of USD 52.7 billion (approximately JPY 7.5 trillion), the program will support semiconductor companies’ R&D and manufacturing. Semiconductor manufacturers inside and outside the U.S. have announced huge investment plans based on the assumption that they will receive this support.

  On August 16, as part of the Inflation Reduction Act, the terms and conditions of EV, PHEV, and FCEV purchase assistance (tax credit) were revised. The same tax credits of up to USD 7,500 per vehicle were implemented as before, and assistance for the purchase of commercial EVs and used EVs was added. The new bill also sets a number of new conditions, including that EVs, PHEVs, and FCEVs must be produced in North America (U.S., Canada, and Mexico) and that a certain percentage (to be increased annually) of the value of battery components and critical minerals must be produced and sourced in North America. However, the Alliance for Automotive Innovation (AAI) counters that it is difficult for OEMs and suppliers to meet these requirements in a short period of time and that many EV, PHEV, and FCEV models will not receive support.

  Furthermore, on August 25, the California Air Resources Board (CARB) announced "Advanced Clean Cars II," a proposed regulation that would make all vehicles sold in the state zero-emission vehicles (ZEVs) by 2035. FCEVs and some PHEVs are also counted as ZEVs. A formal decision is expected this fall. The new regulations will apply to automakers and are planned to be tightened each year, starting with a 35% ZEV requirement in the 2026 model year (MY), increasing to 68% in MY 2030, and then to 100% in MY 2035. Automakers that fail to meet the regulation will be fined up to USD 20,000 per vehicle for each vehicle that fails to meet the regulation.

Related Reports:
Electric Vehicle (EV/PHV/FCV) Sales Monthly Report (August 2022) (Sep. 2022)
WCX 2022 (2) Electrification development speed creates concerns in maintaining pace (May. 2022)
The USMCA and the Mexican Automotive Industry (Apr. 2022)
U.S. Emerging EV Automakers: Rivian goes to volume production following Tesla (Feb. 2022)
CES 2022: Major OEMs accelerate electric vehicle push (Feb. 2022)
U.S. Fuel Economy Regulations Tightened: MY 2026 CO2 171 g/mile, CAFE 52.0 mpg (Sep. 2021)
U.S. Market: Biden Administration Plans to Promote EVs and Strengthen Semiconductors (Jul. 2021)


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