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The European Union will allow subsidies for electric cars to offset US aid


The announcement comes after Volkswagen threatened to put its plans to build a new battery factory on hold.

Photo of the Volkswagen factory in Navara Ander Jelenia/AFP

Enrique Serpeto

03/09/2023

Updated at 7:08 p.m.

The European Union will authorize national governments to match public aid with European manufacturers Electric cars as a way to prevent them from moving their factories to the United States, which has been attracted by the subsidies announced by the Biden administration.

The action was announced while the Chairman of the Commission declared, Ursula von der Leyennamely on an official trip to the United States to try to agree on a different solution, so it can be concluded that his efforts were not successful.

Danish Competition Commissioner Margrethe Vestager said in a statement that the new measures allow governments to “deliver state aid in a fast, clear and predictable way”. The news has not yet been known Volkswagen GroupEurope’s largest automaker has announced that it plans to put its plans to build a new battery plant in the European Union on hold, pending Brussels’ response to US subsidies.

Last summer, the Biden administration passed an “Inflation Reduction Act” (IRA) that includes a public aid package for zero-emissions technologies, worth 369,000 million dollars. Manufacturers with factories in Canada could also benefit from these subsidies, but Von der Leyen was unable to get Washington to agree to grant the same treatment to factories on European soil.

Plan now approved by commission It includes the possibility for countries to support the production of solar panels, batteries, wind turbines, electrolyzers and heat pumps in a time-limited manner, provided that the factories are located in areas with economic problems or that the support is shared by several countries.

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